Australian planning groups go global

Arun Abey may be the executive chairman of planning group ipac Securities, but he is happy to admit that at heart he is really just a frustrated travel writer.

If Abey were ever to abandon his chosen profession to indulge his literary fantasy, then he would certainly be well equipped.

In the last six months, ipac’s desire to spread its very Australian brand of financial planning to the world has taken Abey to South Africa, the Philippines, Taiwan, Hong Kong, the UK, India and Singapore, to mention a few. And next month, he will set off on behalf of ipac once again, this time to South Africa, Ireland and Hong Kong.

Ipac launched its first ever offshore business — a New Zealand subsidiary that ipac no longer owns — within weeks of the group establishing itself in Australia in the early 1980s. It now owns a stake in financial planning businesses in South Africa, Taiwan and Ireland, and is about to launch into the Philippines and Hong Kong.

“We have had an interest in heading offshore almost from day one and that has not changed one bit since,” Abey says.

While Abey’s jet-setting lifestyle may be far from typical, his group’s desire to export its Australian financial planning expertise offshore is.

When the UK’s Financial Services Authority announced earlier this year it was examining plans to abandon the polarisation regime that rules the way financial advice is structured across Britain, it was not a surprise to those in the know to find Australian groups being touted as some of the major beneficiaries.

In recent times, large Australian institutions like National Australia Bank (NAB) and AMP have made enormous investments to bolster their already considerable presence in the UK.

Just last week, for example, the NAB pledged a further $90 million to help develop its UK wealth management business.

But the growing presence of Australian wealth management groups in markets like the UK is about more than just a willingness to commit financial resources.

The UK financial planning market, like many in Europe and even Asia, is often said to resemble the Australian financial planning market of five years ago, leaving Australian groups looking to expand into such markets with a sort of foresight not often afforded in business ventures.

This is particularly the case in the UK now where an abandonment of the polarisation regime will mean institutions will be able to own a significant portion of independent planning groups for the first time, allowing the likes of AMP and NAB to boost distribution of their products by buying into third-party dealer groups — a strategy they are more than familiar with in Australia.

“We have been building relationships with advisers in Australia for a long time and if the changes to the polarisation rules happen in the UK, I think people are right to expect that we would leverage off our Australian experience in the UK,” AMP director of advice and services Steve Helmich says.

The platforms that are more likely to guarantee the success of Australian groups offshore than anything else are the same platforms that have revolutionised the Australian financial planning industry in recent years — master trusts and wrap accounts.

Even today, there is little in the UK market that comes close to comparing to the sophistication of Australian master trusts and wraps, and the UK is considered a relatively advanced financial services market by world standards.

For Norwich Union Australia’s chief executive Rob Garnsworthy, this means extra attention from Norwich’s UK-based global parent, CGNU.

With Norwich’s flagship master trust in Australia, Navigator, now administering some $8 billion, Garnsworthy says it is not uncommon to have visiting CGNU executives in Australia trying to find out how they can replicate the success of such platforms in their home markets.

“The group recognises that things in Europe are heading [in the master trust direction] and that is why it is so important to them to have something like Navigator in the group,” he says.

While the proposed changes to the polarisation rules have meant that the UK market has been the focus for Australian wealth management groups looking to export their expertise offshore, it is by no means the only market of interest.

Norwich, for example, is about to launch Navigator into Singapore, a rapidly developing financial planning market that has been taking its cues from Australia for some time.

But according to Garnsworthy, Singapore will only be the first step in a much bigger plan by Norwich to roll out Navigator across Asia.

It is a move that Abey, for one, will no doubt applaud.

“In a lot of the markets we are looking to move into, like the Philippines and Taiwan, there is essentially no financial planning market as we understand it in Australia,” Abey says.

“The good thing about that for us is that we can be seen as the founding fathers of financial planning in those markets. But the problem for groups like ours is that we have to bear all the costs of educating these markets about financial planning.

“My advice to other Australian groups is that if you are competitive in Australia, you will be competitive in some of these offshore markets. So I would encourage other Australian groups to head overseas and join us in some of these markets where we are the only players.”