With the wealth management market growing at a “lightning pace”, a number of global asset managers are looking to establish distribution arms in Australia, says Chase Corporate Advisory.
Speaking to InvestorDaily, Chase Corporate Advisory principal and managing director Jeff Singh said a number of global players were looking to get their “finger in the pie”.
“There are a few global players now looking at the Australian market because super and the superannuation guarantee and the SMSF market are growing at a lightning pace,” he said.
Chase Corporate Advisory is currently working for “two big international firms” in order to assemble mid-tier, vertically integrated wealth management firms for them, added Mr Singh.
The type of businesses Chase is constructing add together advice, funds management and accounting under one vertically integrated umbrella, he said.
“When you talk about opportunities like that with the [institutions], they love this stuff because they can’t continue to acquire these little practices and make it profitable,” said Mr Singh.
In fact, the only way for wealth management businesses to be profitable for big firms is to “tilt product”, he said.
“We ‘cherry pick’ the market and build something for them that is almost exactly what they want and then take it to them as a ‘ready-to-acquire’ package,” said Mr Singh.
But the advice side must be independent of the funds manufacturing side of the business, he added.
“[They must be] truly independent so the KPIs aren’t measured on how much FUM they put into their investment product in-house. The KPIs are measured on the advice fee as opposed to the product fee,” he said.
Chase Corporate Advisory has found a rich vein in the mid-tier level of the advice market, Mr Singh said.
“The larger end is mature; the smaller end is probably not worth looking at. The middle tier haven’t really got their house in order – and what they need someone to do is help them get their house in order,” he said.
Mr Singh acknowledged that some of the mid-tier firms’ houses had ‘fallen over’ due to over-leverage during the global financial crisis.
“You don’t want to bring in too much gearing; you want long-term partners, patient capital, quality product, quality advice and quality clients,” he said.
Chase Corporate Advisory is the firm behind the recent Financial Index Wealth Accountants acquisition of Centric Wealth earlier this year.
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