How long does transitioning to a new licensee take and what is involved?

These are two of the most common questions from practices considering a move.

An orderly and well-managed transition process should take approximately eight weeks, and while it is in the interests of all parties to get it done, it is far more important to do it well.

Typically, a fair degree of the due diligence is carried out by both sides before the transition process commences – mutual fit is of critical importance. Once a practice applies to transfer, the focus is to complete the due diligence and transition process formally.

This usually takes a couple of weeks where a financial services licensee requests a practice to fill in a transfer application form. The form contains reference and background checks and prepared agreements.  The volume of change in the market currently means some of these checks by external agencies are taking longer than normal.

At the end of this due diligence period, a standard authorisation agreement is reviewed and agreed – this will cover the mutual obligations of both parties.  How long this takes really depends on the quality of the agreement and legal advice.  Once the agreement is signed, a practice would generally give notice to their existing licensee of their intention to move – typically 30 days’ notice.

In this period many activities need to occur that require careful management and experienced transition staff at the licensee end, starting with a detailed transition planning session so both parties know what needs to occur.

All legal documentation setting up the transfer must be finalised by all parties. The practice provides letters to clients informing them of the change in licensee, based on a template agreed with both licensees.  Planning the migration of data from Xplan is an important step and a process which will be made much easier if all records have been digitised.

At the end of the 30-day notice period, all ‘new licensee’ services are turned on, authority is issued to advisers and compliance briefings and advice model office training is then conducted. The new licensee will be looking to incorporate the practice into its community so a good deal of contact with them should be expected.

The next three months post the transition will be focused toward operationally bedding down advice processes and systems and ensuring each client is reviewed. Given that any Statements of Advice (SoA) or Records of Advice (RoA) may have been issued some time ago under the previous licence, it is prudent to review and examine your clients’ risk profile and goals to ensure the advice is appropriate to the client’s circumstances under the new licence.

*Nathan Jacobsen is Managing Director of Paragem Pty Ltd ABN 16 108 571 875, AFSL & ACL No. 297276.

 

General Advice Disclaimer

This article is provided by Paragem Pty Ltd ABN 16 108 571 875 (Paragem), AFSL and ACL 297276. Paragem is a wholly-owned subsidiary of HUB24 Limited ABN 87 124 891 685 (ASX:HUB). Paragem is a related body corporate of HUB24 Custodial Services Limited, the operator of HUB24 Invest (an investor directed portfolio service) and the promoter and service provider to HUB24 Super.

The information presented on this article: (1) is intended to be general information only and not financial product advice; (2) has been prepared for holders of Australian Financial Services Licences and their representatives (including authorised representatives), and not for retail clients; and (3) has been prepared without taking into account any person’s objectives, financial situation or needs. Accordingly, before acting on any of this information, the viewer should consider the appropriateness of the information, having regard to their, or their clients’, objectives, financial situation and needs. It is important to consider any relevant disclosure documents, including the information about risks, before making any recommendation about a financial product and before any investment decision is made. Past performance is not indicative of future performance. This article must not be copied or reproduced without the prior written consent of Paragem or used for purposes other than its intended purpose. © Paragem.