More dealer groups are acquiring the less profitable and more passive client books from planning principals to create opportunities for new advisers, a number of advice heads have said.
National Australia Bank Financial Planner Banking national manager Shane Kirsch said a number of large dealer groups and institutions were acquiring these client books to help more advisers within their networks become practice owners over a deferred period of time.
“These sale arrangements not only provide a good low-cost way for junior and new advisers to enter the market, but it’s also proving a valuable recruitment tool for dealer groups,” Kirsch said.
It not only assisted junior advisers who wanted experience, it provided an avenue for salaried advisers looking to enter the independent market and opportunities for advisers wanting to enhance their book with a view to entering an equity arrangement, he said.
“Axa was probably one of the first to offer a program specifically around this offer, however, more groups have begun structuring similar deals with their junior advisers in recent times, with some of the larger independents having space to do this too,” he said.
Axa and Charter Financial Planning national manager Paul Williams said the group’s Discovery Program, which was introduced in 2003, aimed to give the next generation of advisers the assistance they needed to become practice owners.
As part of the program, which was recently extended to Genesys, Axa buys client databases off existing advisers and sells them to new entrants over a deferred period of time.
“The program has helped Axa and Charter to attract over 300 new advisers to date and has reduced the age of the average practice principal within our network,” Williams said.
AMP Horizons director Tim Steele said AMP Financial Planning was also in the business of acquiring client books from practices that were redefining their value propositions and selling them to planners who were looking to grow scale or establish their careers.
Steele said 41 practices had been established by financial planning students from within the AMP Horizons Academy to date, with the opportunity to purchase client books with flexible financing solutions critical to their success.
“While we don’t just facilitate the sale of lower value or more passive books of clients, they can create lower-cost options for newer advisers and at the same time have the potential to develop into higher value and more active client databases,” he said.
