Starting a financial services business is one of the most arduous tasks today. While many individuals already have their leaning towards certain institutions, newcomers find it immensely difficult to establish their grounds. Australians require an AFS License to pursue such endeavors. An AFSL responsible manager, short for AFSL RM, ensures that the licensee covers all authorizations under their license. As such, attempting to expand one’s horizons in the financial services sector is indeed an arduous task. In such instances, there needs to be an unambiguous definition of what “financial services” entail. This article will focus on understanding the same.
What are the financial services covered under AFSL?
Many individuals have a vague understanding of services authorized under the AFSL. Here are some of the products and services covered under this license.
i) Financial Advice – Firstly, individuals engaging in delivering any form of financial advice require a license. These pieces of information may be to other individuals or the general public. Regardless, for the delivery of financial advice, individuals are required to have a proper license.
ii) Trading and Brokering – Secondly, individuals engaging in any form of trading on behalf of others or providing any form of brokering services need an AFSL license. A stock trader often carries out the trade of shares on the stock market on behalf of another individual. As such, individuals depending on such services need to ensure the existence of a verified license. Financial brokering services also require proper verification.
iii) Estate Management – Estate management involves the supervision of interest held on land property. While many individuals believe it is one of the tasks that need not be entirely physical, it is considered a financial process under AFSL. As such, an AFSL responsible manager ensures that individuals can add new authorizations to their license, given that they have the required qualification.
iv) Provide Platforms for Financial Products – Another service many individuals provide is a platform for others. This activity involves the creation of a market to present financial products and services for other individuals to buy or sell. A small example of this is the creation of trading and investment apps. One can observe an increase in the number of traders and investors recently. Especially during the advent of the pandemic and lockdowns, research shows an increase in new investors.
v) Crowdfunding – Finally, individuals involved in performing any form of crowdfunding also require an AFSL license. These licenses let individuals support the cause without the fear of being deceived. As such, crowdfunding, by definition, is the practice of raising small amounts from a large number of people. These activities are done for business causes, and in some instances, also social causes.
Advantages of Licensing
There are a plethora of benefits to applying for a license. An AFSL responsible manager informs individuals about the various programs and assists them in expanding their horizons. Here are some of the benefits.
i) Promotional Independence – Individuals with an AFSL license do not require any form of agency to back them before delivering financial products and services. They can market themselves as entities providing services for the masses.
ii) Compliance – Secondly, individuals with an AFSL license also can enforce better compliance schemes. These schemes are more effective and efficient in today’s scenario.
iii) Security – Finally, individuals with a license also have an immense amount of security and can deliver products and services without the fear of being unauthorized entities. As such, the security factor lets them conduct their businesses more freely.
In conclusion, obtaining an AFSL license, while being an arduous task, is highly beneficial in today’s scenario. Individuals can expand their horizons and conduct their activities freely. As such, with the advent of relaxations in lockdown, many individuals are coming forward and applying for these licenses.