By Derek Grantham, Principal Consultant, Market Engagement
Financial advice providers have had a lot on their plate recently so it’s not surprising that some transitional licence holders have been slow to turn their mind to full licensing. But as someone who’s worked closely with the sector for the last 10 years, I believe there are clear benefits to getting the job done early. And it’s not for the reasons you may think.
Transitional licensing has shown us that most New Zealand advice businesses are small with teams of less than ten people. As with any small business, that means the difference between surviving and thriving can sometimes be tenuous.
When staff, time and resources are stretched, it can be tempting to prioritise work in your business, over work on your business.
And yet how your financial advice business is on the inside very much affects how you are on the outside. When was the last time you had time to consider:
- Are you organised for success?
- Are you focused on clients and what’s important to them?
- And even if you had the time, where would you start?
Full licensing is your opportunity to perform this vital health check, and more importantly, it shows you what to focus on first.
Take the standard conditions that apply to a FAP full licence, for example. Each one is designed to address a real and present danger; a vulnerability or risk that you could face as a financial advice provider (FAP) in the ordinary course of business.
Recent events have shown that the risk of cyber-attacks in New Zealand are very real – is your business equipped to deal with that? If not, how long are you prepared to go without putting some protection in place?
Instead of thinking about whether you have time to apply for a full licence, a more useful question might be: “Am I prepared for a cyber-attack?” And if not, “How long am I prepared to live with that risk?”
The same goes for the other FAP full licence conditions and obligations: the key business risks around properly managing client complaints, disruptive events and keeping appropriate records, are all addressed.
These are the things that keep all business owners awake at night – the process of applying for a full licence gives you a reason to consider them, and to put in place a framework to manage them. And all in a way that is right-sized for your business.
In other words, the process of applying for a FAP full licence is an opportunity to check your advice business is set up for success.
You may already be well on the way. Many of you may have been running a good business for years. There may be good processes that are already well embedded in your business. When you compare those processes to our expectations and examples (available to download in our FAP full licence application kit), you might find a few opportunities to improve – and that’s great.
Nobody’s asking you to produce perfection: perfect structures, perfect processes, perfect policies are not required to apply for a FAP full licence. What is required is demonstration that you’ve thought about the risk and taken meaningful steps to address it, in a way that makes sense for your business.
We want you to succeed. New Zealand needs you to succeed.
If you have any questions as you work your way through the application process, contact us. To that end, my colleague Anita Frazer has provided some excellent insights about how to get the job done easily. I recommend you take a look at her top five tips for becoming fully licensed.
Put simply, applying for a full licence is good for business. It sets you up for success. And who wouldn’t want to get a head start on that.