Future Licensees

Large institutional licensees are going head to head in a battle to grow their adviser networks, while small and medium-sized licensees scramble to redefine their offer and stay relevant in an industry where vertical integration has become almost a necessity.

As the financial services industry approaches a new year, a new dawn awaits – one where it is no longer feasible to be a mere provider of commoditised services and consolidation is the name of the game.

Burningpants’ sister company CoreData set out to explore what the ideal licensee of the future might look like, and identified three key themes: intimacy, leadership and innovation.

The licensee of the future will play a much more intimate and active role in the lives of its advisers, being a promoter and provider of confidence.

Continued consolidation is likely to result in three tiers: the banks, industry funds and a handful of smaller licensees with the ability to leverage scale. Clients that are attracted to a brand will choose a super fund or bank, while clients that want a more intimate service model will seek out a boutique.

Among the smaller, niche licensees, there will be greater integration of accounting and financial planning.

But the middle ground is considered a treacherous place to be for licensees.

It’s not about being big, it’s about having the right operating model in an industry where there’s natural pressure on pricing. It’s about having a strong customer value proposition – or dealer group value proposition – processes to support the proposition and people to support the processes.

Leadership around education and training will become increasingly important as the industry continues its journey to becoming a profession, while licensees will also play a greater partnership role in helping advisers to build sustainable practices for the future.

And as competition intensifies, the ability to differentiate via a strong go-to-market offer is crucial. The licensee of the future should have a defining characteristic as to why advisers want to join them, and a strong culture that advisers buy into.

Licensees that live and breathe all of these things will have a Happy New Year indeed.

To read CoreData’s Licensee of the Future white paper, click here