FYG Managing Director Peter Mancell and General Manager Andrew Wootton were recently featured in Professional Planner discussing the topic of discounts by bigger groups to lure advisers.
Licensing discounts not the way to win adviser loyalty: FYG
June 2, 2021
As the battle to secure advisers from a shrinking base continues and licensees reach for scale and efficiency, Peter Mancell has called out large dealer groups for offering short-term discounts to entice planners across to their network.
Without naming entities, the CEO of 70-adviser licensee FYG Planners said the practice was coming out of “the big end of town” and is doing the industry a disservice on a number of levels.
Above all, he says, short term discounts are a poor way to win the trust and loyalty of advisers you want to form a true partnership with.
“At the end of the day every licensee should have an offering that’s available to every adviser in the group,” Mancell tells Professional Planner. “If they have to resort to discounting to retain them that surely that’s not a good way to win long-term loyalty.”
Not only is the practice unsustainable, Mancell continues, but building the licensee/adviser relationship on the cheapest possible price means the relationship has a fundamentally weak foundation.
“You wouldn’t go to a restaurant where you knew the food was poor just because it was half price,” he says.
The CEO reveals there are “at least a dozen” advisers FYG has spoken to recently that have opted to take discounted pricing in the short term to save money, with the intention of reconsidering towards the end of the discount period.
What can really undermine the strategy, adds FYG chief executive Andrew Wootton, is the discontent that split level pricing can cause with the existing advisers that are left paying a higher price.
“We know advisers that are paying twice what other advisers in their network are paying and I don’t think they’re happy,” Wootton says. “It’s no different than a bank offering cheaper rates to new borrowers than what existing borrowers pay.”
Mancell says he can appreciate why advisers, already beset by “huge compliance costs”, might jump at the chance to pay less for licensing – at least in the short term.
The danger, however, is that they’ll find themselves embedded in a licensee network that doesn’t share their long-term view on advice.
“A lot of advisers plan to leave but not as many do,” he says.