Dealer groups scale back to lift quality

IFA cover story

By Darin Tyson-Chan
Mon, 05 May 2008

Page 1 of 2

A loss in adviser numbers has not spooked dealer groups who are keen to focus more on quality than quantity.

The financial planning dealer groups that experienced the largest loss of advisers in the second half of 2007 are all comfortable that the downward movement in numbers will result in better quality of advice.

Out of the top 20 dealer groups that had adviser departures, Westpac Financial Planning suffered the highest number with 118 authorised representatives leaving the fold.

However, the bank told IFA the loss of planners was mainly staff from the low end of the corporate model.
The group's focus has been all about getting the right planners in front of the right customers, which has resulted in a lot of employees leaving the network at the entry level, according to Westpac.

Other movement has come as a result of senior planners wanting to run their own practices switching over to the Westpac-owned Magnitude Financial Planning, which means overall the corporation was not losing those professionals.

Genesys Wealth Advisers ranked a close second behind Westpac in terms of advisers lost, with 97 of its authorised representatives opting to leave the group.

The movement came as no surprise to Challenger-owned Genesys as it had anticipated its new value proposition would prompt some of its planners to move on.

"More than anything else we've been in significant change for a fair period of time. Our new financial terms rolled out to the network on July 1 last year and that period of time is certainly the normal settling in period for a new system," Challenger Financial Planning chief executive Greg Kirk says.

"The net loss would be consistent with the themes that we've already been talking about to the market and that is there have been certain member firms and authorised representatives who weren't aligned to the model who chose, for either economic reasons or otherwise, there was a better model elsewhere."

Dealer groups scale back to lift quality

IFA cover story

By Darin Tyson-Chan

Page 2 of 2

Kirk says the loss of planners does not necessarily mean the group has lost whole practices at the same time.

"A lot of the activity you're seeing there and a lot of the exits are authorised reps inside member firms and not always the member firms themselves leaving," he says.

AMP Financial Planning lost 82 advisers over the period but director of financial planning advice and services Steve Helmich feels as a percentage of the whole dealer group that level of attrition was acceptable.

"That's about a 5 per cent turnover on our total number of planners and I think that's outstanding. I worry if your turnover gets above 10 or 15 per cent," Helmich says.

"If you're getting above 10 or 15 per cent you are recruiting to replace rather than recruiting to grow and that's where it gets to be a bit of a struggle.

"That's why I've always been really strong on tough selection up front of your people because if you can select really hard up front there's less chance of you making a mistake down the track of having to pass someone off."

In addition, Helmich feels a six-month time frame is not entirely relevant to measure the success or failure of adviser turnover rates.

"The other measure that is worth looking at is what is your four-year retention rate of new planners you put on. At our best that's been around 66 per cent . if you look at historical averages in the industry it's been as low as 10 or 12 per cent," he says.