Transitioning licensees for HLB Wealth in Perth WA represented a 30-year departure from its previous licensee.
But when its former licensee started to go quiet on HLB’s future beyond 2018, the practice took things into its own hands and began interviewing seven licensees.
“For us it was all about cultural fit,” says Leanne Rowley, Financial Adviser, HLB Wealth. “Also, institutional alignments. We wanted to avoid perceived institutional alignments where possible.”
The practice’s experience with a large institutionally owned dealer group had been marred by an overly zealous legal team who made compliance impractical with the daily operations of business.
“We knew whatever advice we put in front of the client was thoroughly checked but it was not necessarily commercial, nor practical from the client’s perspective,” says Rowley. “We wanted someone who was prepared to work with us with regards to compliance and to apply logic to it.”
Further, the tick-the-box approach to compliance did not suit all clients. If the practice wanted to escalate things, it also was very difficult because of all the layers of red tape.
The one thing the practice wanted to retain about its former licensee was the sense of community. Its previous dealer group had representatives in Perth, so having access to that resource had been terrific for the business.
Licensees are not all the same
The due diligence commenced in December and was conducted by Rowley herself with practice Principal, Peter Speechley attending initial meetings and updates.
Questions were mainly directed to Nathan Jacobsen, Managing Director of Paragem. Peter also spoke to other Paragem practices about how their experience had been with the licensee.
By April, the practice had selected Paragem and by mid-July had completed the transition.
Rowley was surprised during the due diligence process how much the licensees differed. How the licensees use their systems, how they constructed their Approved Product Lists (APL), and even the model they used to structure the licensing itself, varied considerably.
HLB Wealth was keen to maintain their software provider, and more importantly, for it to be used in a similar manner by the licensee.
Straight-forward change
Rowley says the actual implementation of the licensee transition did not involve a lot of change, apart from stationery.
“The only challenge is the additional work in terms of preparing Foundation Statements of Advice, other than that no issues or challenges from our perspective,” said Rowley.
The agreements had been finalised as part of the due diligence, so transition was just a matter of finalising paperwork and deed arrangements.
HLB Wealth gave the required 30 days-notice to its previous licensee and the practice conducted ASIC checks on Paragem and vice versa with authorised representatives at the practice. Paragem also conducted education and background checks and audited selected files.
Paragem notified the relevant fund managers and insurance providers of the practice and managed the transition of clients from the old licensee across to the new adviser codes with Paragem.
The fund managers on the APL were also given 30-day’s notice, after which approval letters from the practice’s previous licensee came through. Paragem managed this for the practice.
Client letters were then generated from the back-office alerting clients of the change. Paragem recoded some of HLB Wealth’s existing documents so the documents felt very familiar and clients could feel a continuation of service.
“We wanted our clients to feel like not much was going to affect them,” says Rowley. “Having been through a licensee change as part of the business merge in November 2016, the clients were familiar with the process of changing licensees.”
The business only received two client queries and they were just to make sure they were staying with their existing adviser.
A good fit
While HLB Wealth’s previous licensee had been tough on compliance, Rowley says “Paragem took a logical and pragmatic approach which made operations much smoother”.
“Whilst we had a great relationship with our previous licensee, we felt there was sometimes a tendency to overcomplicate things,” she explains.
Rowley describes the transition as seamless: “We chose Paragem largely because of the people; they are pragmatic and down to earth. They are always very eager to assist and very knowledgeable.”
Issuer & General Advice Disclaimer
This document has been issued by HUB24 Custodial Services Ltd ABN 94 073 633 664, AFSL 239 122 (HUB24) and is current at November 2019. It is only for use by Australian Financial Services License (AFSL) holders and their authorised financial advisers. It is not for use by retail clients. HUB24 is the Operator of HUB24 Invest (an investor directed portfolio service), Promoter and service provider of HUB24 Super which is a regulated superannuation fund. The trustee and issuer of interests in HUB24 Super is Diversa Trustees Limited ABN 49 006 421 638, AFSL 235 153, RSE License No. L0000635 (Trustee). The information in this document is intended to be general information only and not financial product advice. It does not take into account any person’s objectives, financial situation or needs. It is not legal advice. Accordingly, before acting on any of this information, the reader should consider the appropriateness of the information having regard to their or their clients’ objectives, financial situation and needs. This information is based on the experience of a single wealth management Practice. It relates to that Practice’s experience and is provided for illustrative purposes only.