Boutiques continue to flourish

IFA cover story

By Kate Kachor
Mon, 05 May 2008

Page 1 of 2

The downturn in the market has had little impact on Australia's non-institutional dealer group market.

Market conditions have done little to dampen the growth of Australia's boutique dealer group sector, with more than half the market recording double-digit growth in adviser numbers in the second half of 2007.

The groups who pulled in big numbers in the six months to December 31, 2007, are Wealthsure Financial Services, Infocus Money Management, WHK Group and Snowball Group, according to the IFA Dealer Group Survey.

Wealthsure Financial Services' adviser numbers rose by 59, from 142 to 201, while Infocus Money Management added 48 planners, topping its adviser network at 100.

WHK Group and Snowball Group were also big movers with WHK adding 40 new advisers and Snowball Group recruiting 62. The group's total adviser numbers stand at 136 and 90, respectively.

Both of the listed dealer groups have been vocal about boosting their adviser numbers, with each group making a number of acquisitions in the past six months.

In the month of April alone, WHK added four financial services businesses to its network, while Snowball purchased the assets of Yarra Financial Group, a Melbourne-based advisory group with about $130 million of funds under advice.

The boost in Snowball Group's adviser numbers came from three sources: internal recruitment, external recruitment and through acquisition, managing director Tony McDonald told IFA.

"We actively approached the advisers who were recruited into Outlook and Western Pacific. The acquired practice came to us as an enquiry," McDonald says.

"The way we have attracted new advisers has not changed. We aim to selectively recruit additional advisers both internally and externally to meet demand."

However, even though the bulk of the non-institutional dealer group market returned solid growth numbers, Count Financial managed to retain its top position despite only adding 13 new advisers.

Count Financial continues to steam ahead of its industry rivals with its adviser network growing to 926. The accounting group's closest competitor is Australian Financial Services with 205 advisers.

According to Count Financial executive chairman Barry Lambert, the group's increase can be attributed mainly to organic growth but also from unsolicited interest.

"One of our sole practitioner firms merged with a large PIS [Professional Investment Services] firm and they chose to join Count. A couple of firms have come from Genesys, one in anticipation of being bought by Countplus," Lambert says. 

"Another formerly associated with PIS has also joined Count and yet another is joining from an ING-owned dealer because of Countplus and the above reasons. There is probably others I am not aware of."

Boutiques continue to flourish

IFA cover story

By Kate Kachor

Page 2 of 2

Even the recent market downturn has potential for growth opportunities, Lambert says.

"Recent corporate changes and financial crises will throw up more opportunities and we will be ready to accept suitable candidates. Our aim is firmly placed on quality and not quantity," he says.

"I believe the recent financial crisis will greatly assist us because of our financial strength and our track record in avoiding Westpoint, Basis and Fincorp."

However, as well as being able to cater for any new growth opportunities the market may throw up, the retention of new staff is still a high priority.

"We offer Outlook advisers bonuses based on pre-agreed targets. All senior Outlook advisers are also shareholders in the holding company [Snowball Group Limited]," McDonald says. 

"Western Pacific senior advisers are indirect shareholders in the holding company and participate in a share allocation scheme based on revenue contribution. We believe that appropriate incentives are important in motivating and retaining advisers, but so is culture and the services available to advisers."
Lambert agrees.

"We use our buying power to pass back superior value to advisers. This is done in many ways, including 100 per cent payout on platforms and equity allocation based on overall business, not just investments. To date the value passed back is more than $100 million and greater than our total profits generated since listing in December 2000," he says. 

"We don't offer any incentives to retain advisers except outstanding value. We believe if advisers want to leave they should do so. Of course, our equity and very competitive arrangements means advisers seldom leave. We will not tolerate poor compliance with our business requirements so this occasionally sees some leave."