Advancing out of the shadow of St George

SINCE its merger with St George Bank in 1997, and in particular over the past year, Advance Asset Management has battled to receive market attention of its own.

While it has recorded a 27 per cent growth in business to March this year — double that of most players in the funds management industry — and recorded an above 20 per cent annualised return for the past five years, and made record sales for the past five months, its relationship with St George has remained the point of focus.

This has been further exacerbated in recent times with the expiry of St George Bank’s articles of association, which limited the holding of any individual shareholder in the bank to 10 per cent.

Industry sentiment is that it is only a matter of time, and price, until St George is taken over, with obvious repercussions for St George’s business interests such as Advance Bank and Sealcorp.

However, Advance Asset Management’s managing director Stephen Lam says the expiry date of the articles of association was just that, a date, and does not in any way impose a question mark over the future of the business.

“Mergers and acquisitions happen to every business. If that happens, that’s fine. The best thing for us to do is grow the business,” he says.

For this reason, Lam is keen to discuss exactly what his business has been doing for the past 12 months and what its strategy is for the future.

He is frank in saying the goals of the business align with those of St George and says it makes sense for Advance to dovetail into its strategy.

“We are an integrated part of St George and there is no point for the bank to go in one direction and us in the another,” he says.

In this way, Lam says Advance has four major goals for the business. These include the strengthening of customer relations, leveraging to further grow the business, differentiating its services, and placing a stronger emphasis on staff.

While Advance does not own any distribution networks, the St George Bank, independent financial advisers and master trust platforms are its main source of distribution. Lam says it has business development managers (BDM) in each state, with the support group co-ordinated out of Sydney.

“We have been adding resources to our own distribution area, hiring more BDMs and further training adviser support managers, as well as enhancing our overall sales process and adding common sense to our systems,” he says.

Lam says its strategic alliances with Maple Brown Abbott, Goldman Sachs and Morgan Stanley have helped to maintain its investment performance and their robust management style has helped to weather the investment markets.

The two best performing funds for Advance over the past year have been the Advance Imputation Fund at 6.75 per cent up to the end of May this year compared to the ASX 200 index of 3.23 per cent.

The Advance International Sharemarket Fund has also performed relatively well, recording negative 9.97 per cent up to May, compared to the MSCI index of negative 21.6 per cent.

Over the next quarter, Advance Asset Management will launch more investment products. While Lam is reluctant to say exactly what they will be, he says they will not include a socially responsible investment or a hedge fund because he says at this time, they are hard to sell.

Lam agrees that Advance has been a quiet achiever over the past year, finetuning its processes and taking stock of where the business is at. He says while the market does know who Advance Asset Management is, he is keen to build on the profile of the business.

“I think they do know who we are. But it doesn’t mean we stop here. We are here for the long haul and we mean business,” Lam says.