InFocus: Climbing up the ranks

Since the banks announced their departure, there has been an ongoing race among the mid-tier financial planning groups to fill the void. 

The key groups in this segment have been busy over the past few months expanding their businesses through both organic growth and acquisitions, including looking at possibilities presented by businesses of advisers who are exiting the industry and other Australian financial services license (AFSL) holders. 

On top of that, mid-tier groups have also been trying to lure in advisers who left institutional groups and are now looking for a new home.

The changes have already been captured by data and, as of June 2021, institutionally-aligned groups were in minority within the top 10 largest financial firms by adviser numbers.

By comparison, five years ago, Synchron was the only independent group in this ranking, according to Money Management’s 2016 Top Financial Planning Groups research.
At the same time, there has been significant changes within the licensee owners, as groups such as Easton and Sequoia, which own numerous AFSLs, having risen to the top 10 biggest groups in the country.

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One thing that is inevitable across this market segment is the consolidation, in particular at the practice level, according to Keith Cullen, managing director at WT Financial Group, the Australian Securities Exchange-listed parent of Wealth Today, which announced the acquisition of Sentry Group in June.

Cullen will now head an entity with the combined number of 275 advisers, including a combination of general advice and wholesale advisers, who are not listed on the Australian Securities Investments Commission (ASIC’s) Financial Advisers Register (FAR). 

He said he expected new advisers to join the group in July and aspired to build a substantially larger group over the next few years. More specifically, his plan was to grow his adviser numbers to surpass the average mid-tier group. This would position the business as a serious competitor to other listed entities such as Centrepoint Alliance, CountPlus, and Sequoia Financial Group. 

Further to that, Cullen said Sentry was already in the process of scaling back to one AFSL and the advisers who had been sitting under those other AFSLs had been gradually moving across to their main AFSL.

“We’ve done the same on our side once we acquired Wealth Today when we had two AFSLs but we moved everything out of one of them and we are in the process of shutting it down,” he said.

Wealth Today was acquired by the publicly-listed Spring FG in 2018 which rebranded WT Financial Group a year later.

Further to that, Cullen said once Sentry Group had completed moving everyone across to one AFSL, the new combined group would operate two AFSLs. However, he did not dismiss the idea of merging the two AFSLs ‘at some point’ down the road, but stressed this would not apply to brand names.

“For the foreseeable future we intend to keep operating both the Wealth Today and the Sentry brands but it does not mean that we need two AFSLs ultimately because all that does is it makes additional costs – two compliance committees, two sets of insurance, two sets of everything,” he said.

Also, Sequoia Financial Group, which currently owned a number of licensees, including Interprac Financial Planning, Libertas Financial Planning and Sequoia Wealth Management, announced acquisitions in June.

According to its announcement to the ASX, Interprac FP, which had over 300 advisers alone and was ranked seventh-largest financial planning group in the 2020 edition of

Money Management’s Top Financial Planning Groups ranking, bought additional customer books in June.

These were Hobart-based FF Planning Solutions and Melbourne-based SFG Financial Services and the move expected to add more than $500,000 of annual recurring fee-for-service income. 

The acquisitions were made from former authorised representatives of the firm and were in line with the strategy under which retiring advisers were provided equity in the group and their customers could continue to be served by the group.

Michael Butler, head of advice and compliance at Sequoia, said: “We believe that providing the scale of having the advisers under the main license is better than just adding the conglomeration of licenses.

“If you look at the Sequoia Group as a whole we have a very horizontally-integrated model where we offer services to financial planners and accountants across the whole name – we have a stock brokering licence, corporate document services, we can open up trusts and super funds and we have a self-administration and information channel. 

“So, it’s based on the provision of services and we like to think that the advisers that choose to come to us are looking for that sort of service rather than product or distribution services.”