Dealer Groups

Dealer groups

Background into dealer groups.

Up until the early 1990s, financial advice was provided by various professionals such as stock and managed fund brokers and insurance agents, who incidentally also have products to sell. This origin is evident in the fact that several of the current large Personal Financial Planning organizations identified are associated with stockbroking companies, fund managers and insurance companies, hence the industry practice of referring to Personal financial Planning organizations as “dealer groups”.

The financial planning industry is predominantly structured in the form of dealer groups. Dealer groups often employ large numbers of financial planners and agree to be responsible for offering them training, licensing and support services. Dealer groups also provide financial planners with a range of support services including the management of compliance and regulatory matters, administration, provision of product research, and information technology. Affiliated dealer groups also provide their clients with access to the master trust or wrap platforms of the group with whom they are affiliated.

Dealer Groups and Financial Planning.

In Australia, individuals or business entities who wish to offer financial services as a business are required by the Corporations Act, 2001 to be a holder of an Australian Financial Services (AFS) licence. They can be licensed personally, as a director or employee of an AFS licence holder, or as an authorised representative of an AFS licence holder.

How dealer groups work.

In the Australian market, financial product manufacturers are usually large banking groups which own several parts of the value chain, including administration platforms, insurance and superannuation products, as well as a range of other investment solutions. 

Apart from owning financial planning divisions that bear their name, the big players in the financial services space also own one or several dealer groups that...