Western Pacific puts the accent on absolute returns

The freedom to be more adventurous when picking a fund manager and the ability to be a little more unconventional in investment philosophy are the big pluses of being an independent dealer group, Western Pacific Financial Group chief executive Geoff Pritchard says.

The Western Pacific Group was established in 1985 when five of insurance giant AXA’s biggest writers decided they wanted to set up their own financial planning operation.

Over time, they either wound-up or sold off their insurance registries and focused on their financial planning businesses. Now with 45 proper authority holders, Western Pacific is wholly owned by the financial planners and has over $1.2 billion in funds under advice, mostly from high-net-wealth clients.

As a boutique dealer group, Western Pacific is trying to align itself with entrepreneurial fund managers that aren’t necessarily using the index as their benchmark.

“One of the problems we have here in Australia is when a fund manager gets to a certain size, it’s almost impossible to find opportunities beyond the big blue chip stocks,” Pritchard says.

He says this is why Western Pacific has bought out shares of four independent fund managers. The group now owns about 20 per cent of MMC, Select Asset Management, Acumen Capital, which is a joint venture with Multiplex, and 20 per cent of the Symmetry Master Trust.

MMC, for example, is a small boutique fund manager run out of Adelaide. A core portion of Western Pacific’s equities exposure is provided by this fund. Pritchard says these smaller managers can provide clients with a unique proposition in the management of Australian shares by following a strict value approach to investments.

Not that it’s impossible for the bigger fund managers to offer diversified investment choices — but for Western Pacific, it’s more about being able to take a few more risks and develop an investment philosophy that has constant input from all of the group’s advisers.

“Primarily we have a very different approach to investment in that we’re very much an absolute returns focused dealer group,” Pritchard says.

Even if competitors achieve a return of 15 per cent over a given year for their clients, and Western Pacific can only provide 10 per cent, his advisers won’t be too fazed, he says.

Although, on the other hand, if the group’s competitors lose 10 per cent and Western Pacific only loses 5 per cent, Pritchard will still be angry that they have delivered a negative return to clients.

One of the group’s advisers, Terry Anango, says he was attracted to the group’s independence.

“With an independent dealer, the adviser usually has some input feeding back up towards the research department. Even if I joined Count for example, which is also an independent group, because of its size it would still dictate a lot of how things are done without asking me.”

Anango says the group’s fee-for-service remuneration system provided another incentive to join Western Pacific.

“It’s more clear exactly what the client is paying for,” he says.

“I’m an independent business person. In other words, I’m in the business for myself, my income depends on my activities and I want to be in a dealer group that has other individuals like me and we all think the same and we all have a mutual common interest. But this doesn’t mean we’re told what to do or what products to select.”