The financial services firm is also continuing to “actively canvas” appropriate mergers or acquisitions, according to SFG managing director Tony Fenning.
In SFG’s annual report, released last Friday, Mr Fenning said the company was looking to acquire companies that “complement SFG Australia’s strategic direction or expand our capabilities and scale”.
The wealth management firm recently added $25 million to its St George debt facility in order to fund further tuck-in acquisitions, following its purchase of Lachlan Partners, Parkside, W Corp and ITS in the 2012/2013 financial year.
Lachlan Partners was the most significant addition to the group for the year, adding 59 accountants and financial advisers across offices in Melbourne, Sydney and Brisbane.
The acquisition has boosted SFG’s SMSF capability, given that Lachlan Partners currently administers around 450 DIY superannuation funds and provides advice to more than 2,000 SMSFs.
In the ‘Looking ahead’ section of the annual report, SFG outlined its plans to build Lachlan Partners as well as integrate it across the entire business.
“[The Group intends to] roll out self-managed superannuation services, tax and accounting and other services over time to the whole Group,” said the report.
“We are proactive in looking for strategically attractive transactions that can deliver value for our clients, our people and our shareholders,” said Mr Fenning.
SFG also plans to continue the organic growth of its established core advice businesses: Shadforth, Outlook and Western Pacific.
The annual report also highlighted a number of “important business risks” and the company’s responses to them.
Like most wealth management firms, SFG’s revenue is tied to client portfolios which are vulnerable to adverse market conditions, said the report.
SFG is also exposed to operational risks including “risks arising from process error, fraud, information technology infrastructure and system failure, failure of security and physical protection systems, and unit pricing errors”.
These risks are mitigated partly though compliance procedures and insurance, said the report – along with the outsourcing of certain business functions “where appropriate and cost effective”.
Further changes to financial services legislation, regulation or government policy could affect SFG by altering the demand for services, said the report.
Such changes could “cause an increase in costs to deliver services or through requiring a restructure of the way in which the Group operates its business”.
The company will also be keeping a close eye on the competitive landscape in financial services to identify changes in market sentiment, behaviour or competitors that could threaten its business model, said the report.
SFG’s reliance on financial advisers and accountants is another identified risk, which the group says it mitigates through a meritocratic work environment.
“The Group has a number of incentive plans applicable to different job roles, as well as benefit programs available to all employees and their families,” said the report.
Finally, like all financial services companies, SFG is exposed to litigation risk including contractual claims, professional negligence, employee claims and regulatory disputes.
Litigation risks are managed through the company’s compliance program, its corporate governance framework and the professional indemnity insurance it has in place, according to SFG.
