Making better choices

We recently learnt that 98% of the new advice licensees that commenced operation in 2023 were “micro-licensees” – licenses with fewer than 10 advisers. 

Despite the media attention, this is not a new trend. In fact, it’s the inevitable and desirable response to conflicted industrialised advisory models and vertically integrated businesses. The post-Royal Commission reality is that there are more than a few “boutique-licensees” (5-15 advisers) that operate more efficiently and effectively than their larger competitors (and with a much smaller regulatory risk footprint). 

The push towards professionalism and the push against product distribution have driven this significant industry change. We’ve been supporting self-licensed businesses for over twelve years, and we’re proud of the part we’ve played in the inevitable emergence of an advice profession. While we are strong advocates of independent self-licensed advice businesses, we know (based on our data) that not every adviser, or practice, has the competence or capability to hold an Australian Financial Services License and comply with the laws and their license conditions. 

Some can’t comply, some won’t comply, and others simply don’t bother. Complying with the law, like providing exceptional advice, requires consideration and conscious effort. It also requires time, resources and focus. Compliance can be challenging for smaller licensees, but history shows that even large, well-resourced licensees can struggle with it.

 A 2026 Reality Check

Self-licensing remains one of the most consequential structural decisions an advice business can make. However, the context in which that decision is made has shifted meaningfully in recent years.

The Quality of Advice Review has signalled a direction toward more flexible, scalable advice delivery, with an emphasis on efficiency and accessibility. At the same time, regulatory expectations around governance, accountability, and operational resilience have continued to increase.

In practice, this creates a tension. While advice delivery may become more streamlined, the obligations attached to holding an AFSL have not become any simpler. If anything, they have expanded into areas such as cyber security, breach reporting, and oversight of outsourced functions.

The result is a more polarised landscape. Well-structured, adequately resourced licensees can operate effectively and profitably. Subscale or underprepared licensees face increasing pressure on both cost and compliance fronts.

Any decision to self-license should be made with this modern context firmly in mind.

In fact, the economics of self-licensing are highly sensitive to scale.

While it is often stated that few licensees operate profitably, this is not universally true. The more accurate distinction is between sub-scale and appropriately scaled licensees.

Subscale AFSLs typically experience:

• high fixed compliance and insurance costs relative to revenue
• reliance on a small number of responsible managers
• limited capacity to absorb regulatory or operational shocks

In contrast, scaled licensees are better positioned to:

• distribute fixed costs across a larger adviser base
• invest in systems, governance, and specialist roles
• maintain redundancy in key functions such as responsible managers

Self-licensing requires a shift from following a dealer group’s processes to designing and operating your own risk-based compliance framework.

For many practices, the decision to self-license should therefore be assessed not only on philosophy and control, but on whether sufficient scale can be achieved to support a sustainable operating model.

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Understand your options

“Licensees are advisers willing to work 120 hours a week in their own business to avoid working 40 hours a week for a product issuer”.

If you find yourself in the position of trying to find a path forward, understand that those advising you might have their own reasons for their recommendations. We predominantly support self-licensed businesses, so we’re equally conflicted, but we’ll do our best to objectively lay out your choices, their costs and implications.

1. Authorisation. It may seem counterintuitive to respond to your ejection from a (collapsing) licensee by joining another licensee, but it’s not always a matter of ‘any port in a storm’. Some exceptional licensees have the resources, leadership and expertise to provide you with the authority, support and assistance to continue to provide financial product advice. Please choose carefully and avoid any that see compliance as a problem to be avoided, have inadequate resources or restrict you to in-house products. 

A good licensee will provide you with the leadership, compliance and competent services you need to prosper. It should also provide you with time and convenience by relieving you of the burdens of running a licensee in a complex, complicated regulatory environment. 

The cost of an authorisation tends to sit around $40,000 pa per authorised representative, but this depends on the licensee, the services provided and whether Professional Indemnity is included. If you need to be pointed in the direction of some appropriate licensees, email help@assuredsupport.com.au. 

2. Employment. It may not suit every adviser, but there are a number of highly competent licensees that have chosen to manage the risks and costs of intermediated distribution by employing and directly managing advisers. Industry funds, accounting practices, and some small to medium licensees operate using this model. While they may be more restrictive than other licensees, they are often better resourced and possessed of a more realistic risk appetite. They’ll either employ highly experienced risk and compliance staff or engage professional firms to provide objective advice and support. These salaried positions cost you nothing but your willingness to operate efficiently, honestly and fairly as an employee of the Licensee.

3. Self-licensing. Being a good adviser doesn’t necessarily equip you to run an efficient business nor does it necessarily prepare you to manage a Licensee. An AFSL is not a cash-cow anymore; regulatory expectations, costs and obligations continue to increase, and the financial costs of non-compliance remain significant. 

On the other hand, if you’re an ethical professional with management skills and appropriate education, resources and experience, this may be an option. Just don’t choose this option if your motivation and focus is purely financial. Few licensees make a profit, and with the loss of conflicted remuneration and product rebates, more will struggle to meet increasing requirements and declining margins. Scaling generates opportunities, but as has been recently demonstrated, can often generate significant liabilities.  These risks and costs can dissuade some, but are ways to mitigate these costs – by outsourcing, implementing a shared-services model with other advisers, making lateral shifts or embracing technology. If you’d like advice, email us. 

Outsourcing is no longer a peripheral consideration. For most self-licensed firms, it is a central component of the operating model.

Commonly outsourced functions include compliance support, paraplanning, file reviews, and elements of IT and cybersecurity. While outsourcing can improve efficiency and access to expertise, it does not reduce regulatory responsibility.

ASIC expects licensees to maintain effective oversight of all outsourced providers. This includes:

• documented due diligence prior to engagement
• clearly defined service agreements and responsibilities
• ongoing monitoring of performance and compliance
• contingency planning in the event of provider failure

Failure to adequately supervise outsourced functions can expose the licensee to the same regulatory consequences as if the failure occurred internally.

The key principle is simple: you can outsource the task, but not the accountability.

Self-licensing can be challenging, but if you have a growth mindset, stable revenue and an analytic approach, this may well be the best option for you. 

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The road to self-licensing

If you are considering self-licensing, start by reading ASIC Regulatory Guide 36 “Licensing: Financial product advice and dealing” and Regulatory Guide 244 “Giving information, general advice and scaled advice”. You should read these even before assessing your competence and capacity (including your proposed representatives) or designing your structure. 

If you don’t obtain professional legal or accounting advice at this point, at least undertake a cost/benefit analysis to assess your choices and their costs. 

Although it may be tempting to delegate regulatory compliance to an external expert, it is critical that you read the following regulatory documents: 

• Regulatory Guide 104 “Licensing: Meeting the general obligations”. This Guide addresses compliance and risk management, monitoring and supervision, training and the technological and human resources needed to demonstrate compliance with your general obligations. 
• Regulatory Guide 105 “Licensing: Organisational competence”. This Guide addresses organisational competence and introduces Responsible Managers – those persons on whom the licensee will rely to operate efficiently, honestly and fairly. You’ll need to nominate appropriate Responsible Managers to cover the authorisations you’ll seek for your licence, so understand who and what you’ll need before you commence your application. 
• Regulatory Guide 126 “Compensation and Insurance Arrangements for AFS Licensees”. This deals with insurance and compensation requirements. You should also read Regulatory Guide 167 “Licensing: Discretionary powers “ to understand ASIC’s position on security bonds and professional indemnity insurance. If you need context, read this article about ASIC’s review of these requirements. Better yet, skip to the punchline by reading AFSL Fundamentals: A quick guide to Professional Indemnity;
• Regulatory Guide 146 “Licensing: Training of financial product advisers”. This may be under review, but it addresses the skills, training and education required by financial advisers. Remember that ASIC have a significant interest in adviser competence and acceptable professional development. 
• Regulatory Guide 271 “Internal dispute resolution”. Like most advisers, you’ve probably never received a complaint, but this may be due mainly to luck or poor classification. Read RG 267 alongside RG 271 to understand your AFCA membership obligations so that you’re not unpleasantly surprised. 
• Regulatory Guide 166 “Licensing: Financial requirements” deals with solvency, cash flow and capital adequacy. A sustainable business needs to be both solvent and compliant so make sure you’ve got the financial resources to obtain and maintain your licence. 
• Regulatory Guide 168 “Product Disclosure Statements (and other disclosure obligations)” and Regulatory Guide 169 “Disclosure – Discretionary Powers” both provide useful insights into ASIC’s expectations of how licensees should approach conduct and disclosure issues. They’re both important, but Regulatory Guide 175 “Licensing: Financial product advisers – Conduct and disclosure” is the most critical Guide for advisers and advice businesses. Don’t overlook the importance of REP515 either. It may focus on large licensees, but the appendices contain a trove of useful information for compliance-focused licensees. It’s worth scanning Regulatory Guide 182 “Dollar Disclosure” at this point too. 
• Regulatory Guide 181, “Licensing: Managing Conflicts of Interest,” outlines principles for managing conflicts of interest in a manner consistent with the law and your licence obligations. It may be inconsistent with the FASEA Code of Ethics, but it’s still the best regulatory guide for managing perennial issues plaguing the financial services industry. 
• Regulatory Guide 234 “Advertising financial products and services (including credit): Good practice guidance” might not have an immediate application, but it will become important once you start to contemplate your marketing and media strategy.

Evolving regulatory expectations

While the core ASIC Regulatory Guides remain foundational, the practical application of these requirements has evolved.

Training standards previously associated with RG 146 have effectively been replaced by the legislated education and professional standards framework. Advisers are now subject to degree requirements, ongoing CPD obligations, and ethical standards embedded in law.

In addition, regulatory focus has expanded beyond traditional advice compliance into broader operational obligations. These include:

• strengthened breach reporting requirements
• increased scrutiny of internal dispute resolution processes
• heightened expectations around record-keeping and supervision
• growing emphasis on governance and accountability frameworks

Although the Financial Accountability Regime is primarily directed at larger institutions, its influence is shaping regulator expectations across the broader AFSL population, particularly regarding clearly defined responsibilities and oversight.

The practical implication is that compliance is no longer confined to advice quality alone. It now encompasses how the entire business is governed and operated.

In practice, effective licensees adopt a risk-based compliance approach. This means allocating time, resources, and oversight in proportion to the level of risk across different areas of the business. Higher-risk activities, advisers, or advice types require more intensive monitoring, while lower-risk areas can be managed more efficiently.

Of course, the more determined applicants will also try to familiarise themselves with the relevant International Standards. ISO 37301:2021, “Compliance management systems” and ISO 31000“Risk management” are the most relevant. 

It’s at this point, and hopefully after taking advice, that you’ll contemplate the most effective way to manage your application. 

Even for novices, the application process is manageable, but using an external provider like Assured Support may save you time, stress, and unnecessary aggravation – we’ll also help you design a compliance framework likely to ensure your compliance with your obligations under s912A of the Corporations Act 2001.

A risk-based compliance approach is particularly important when outsourcing functions. Licensees must determine which outsourced activities pose greater regulatory or operational risk and ensure those areas receive appropriate oversight and review.

Call us today and mention this article to receive 5% off. 

Holding an AFSL is not just about meeting regulatory requirements in principle. It requires building and maintaining a complete compliance infrastructure, including documented policies and procedures, monitoring programs, supervision frameworks, and supporting systems. This infrastructure must be fit for purpose, actively used, and capable of demonstrating compliance at any point in time.

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Indicative costing

The indicative costs listed below are based on client feedback and our research. They are approximations and may reflect only the cost of services provided to small and medium firms by established businesses in key capital cities. 

A significant portion of the cost of self-licensing sits in establishing and maintaining appropriate compliance infrastructure. These are largely fixed costs, which means they can be disproportionately high for smaller or subscale licensees.

Please be aware that the costs for single-adviser licensees and medium to large licensees may be significantly different to the approximations listed below, and these costs can vary enormously between providers. 

If you’d like more information about our pricing, please contact us. 

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Professional Fees: AFSL Application

Approximately $8,000-20,000

Costs are subject to the nature, scale and complexity of the proposed business and the level of project management and advice required. 

Exercise caution when selecting providers and don’t confuse cost with value. Some providers will manage and submit your application without providing you with the framework documents you’ll need to support your application. 

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Professional Indemnity Insurance.

Approximately 2.2% of revenue. 

This is a variable cost based on cover, activity and history. Assume a minimum premium of $16,000 p.a.

Read AFSL Fundamentals: Professional Indemnity

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ASIC Levy

ASIC industry funding levies are not static. While they were approximately $1,500 per licensee plus $2,818 per adviser in 2023, more recent settings indicate around $1,500 plus $2,398 per adviser. The levy varies each year based on ASIC’s cost recovery model and the size of the adviser population. It should also be considered alongside other regulatory and operating costs that continue to place upward pressure on the overall cost of holding an AFSL.

This levy will vary over time.

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AFCA Membership

AFCA membership is often misunderstood as a minor cost line. While the annual registration fee is relatively low, at approximately $400 per year, the real exposure lies in complaint-related fees. AFCA operates on a user-pays model, meaning costs increase significantly as complaints escalate through the investigation and decision stages. For self-licensed firms, this makes complaint management and internal dispute resolution a critical component of the overall cost and risk framework.

Statutory Lodgement Costs (AFSL Application fees)

Ranges from $2,233-$11,305

Subject to size, structure and complexity

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Financial Audit

Approximately $4,000-$6,000 pa

These costs will depend on the provider engaged and the size and complexity of the advice business. 

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Adviser Reviews (compliance audits)

Approximately $2,200-2,800 per adviser/year

Depends on review scope, report quality and reviewer capability. 

Read Adviser Reviews

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Licensee Review

Approximately $13,500-$25,000. 

A Compliance ‘health-check’ and assurance of the Licensee’s compliance and compliance arrangements. 

We recommend our clients undertake this review every 3-5 years. 

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External Compliance Support

Assume $10,000-$14,000 pa for small licensees with few representatives.

Independent, expert and assured support to ensure you continue to comply with the financial services laws.

Costs vary according to AFSL’s specific needs, numbers, and activities. 

CAVEAT: Depending on your provider, there may be additional compliance services available to you, such as pre-vetting, training or access to compliance technology, that are only provided for an additional cost. The development of your compliance framework – the measures, processes and procedures that ensure your compliance with the laws – may also be an additional cost. 

Be wary of Compliance Manuals offered as part of the licensing application process or support contract. In our experience, they tend to be generic documents that simply restate the legislation and regulation. A Compliance Manual that is not customised to your business exposes you to increased regulatory risk.

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Statutory Fees (ASIC charges)

There are no fees to lodge Financial Statements, such as the FS70 or FS71. 

Appointing an Authorised Representative costs $57. Amending an Authorised Representative’s details or ceasing an Authorised Representative costs $36.

BONUS: After your AFS licensee is first approved, you have 10 business days during which you can appoint Authorised Representatives without incurring any fees. 

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Technology (Online training, Research and Planning Software)

The cost of these services depends on the provider, the number of users and the scope of the services they are required to provide. Thankfully, the presence of alternative providers helps to keep costs competitive. In addition, it’s possible to obtain discounts through groups like the Boutique Financial Planning Principals Association . 

With regulatory expectations increasing and regular reporting to ASIC commencing, we’d suggest that a self-licensed business will not be sustainable in the long term unless it embraces reg-tech. You have a range of options to consider, from single-purpose IDR systems to integrated compliance platforms that automate and operationalise the entirety of your risk management and compliance obligations. 

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Cyber security and operational resilience

An increasingly important aspect of AFSL obligations is the requirement to maintain adequate cyber security and operational resilience.

ASIC has made it clear that failures in cyber risk management can constitute a breach of a licensee’s general obligations. This extends beyond technical controls to include governance, documentation, and ongoing monitoring.

Licensees are expected to:

• identify and assess cyber risks across their operations
• implement appropriate controls and safeguards
• ensure third-party providers meet minimum security standards
• maintain incident response and recovery procedures

For self-licensed firms, this represents a material shift. Cyber risk is no longer an IT issue; it is a core compliance responsibility that must be actively managed and evidenced.

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What the transition to self-licensing actually involves

From a practical perspective, transitioning to self-licensing is a structured and often resource-intensive process.

At a high level, it involves:

• defining the scope of authorisations required
• appointing and evidencing suitably qualified responsible managers
• developing a complete compliance framework, including policies, procedures, and monitoring programs
• establishing internal dispute resolution processes and AFCA membership
• arranging professional indemnity insurance that meets regulatory expectations
• preparing and submitting the AFSL application, including detailed proofs

ASIC scrutiny of applications remains high, and it is common for additional information to be requested during the assessment process. Timeframes can vary significantly depending on the complexity and quality of the application.

The most common points of delay or rejection include insufficient responsible manager experience, poorly articulated compliance frameworks, and inadequate resourcing assumptions.

Approaching the process with a clear operating model and realistic resource plan materially improves the likelihood of a successful outcome.

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Help is at hand

Self-licensing isn’t for everyone, but if you are an ethical, organised advice professional with a sustainable and profitable practice, self-licensing may be the best way to protect your functional independence, your personal brand and your clients’ interests. 

The financial commitment aside, even if you partner with a firm like Assured Support, becoming self-licensed will change the way you approach advice. Managing an AFSL well will require a lot of the time, energy and focus you previously dedicated to your clients. Making the trade-off can deliver significant benefits, but there are always costs, so you need to consider self-licensing with your eyes wide open.

Self-licensing offers control, flexibility, and the ability to shape your own advice framework. However, it also requires a level of operational maturity that extends well beyond the provision of advice itself.

For many advisers, the critical question is not whether self-licensing is possible, but whether it is commercially and operationally sustainable in the current environment.

A clear-eyed assessment of capability, scale, and risk is essential before taking that step.

Self-licensing demands more than compliance knowledge. It requires a well-designed operating model, robust governance, and ongoing oversight. Assured Support partners with advice firms to build and maintain that capability.

Contact us to discuss your next step.

A modified version of this article was published by FS Advice.

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Frequently Asked Questions