Big players boost their stakes

Every year since 1999 whenMoney Managementpublished its first annual Top 100 survey into Australia’s 100 biggest financial planning dealer groups, AMP Financial Planning has dominated.

Back then, it was Australia’s largest dealer group with 1,472 financial planners. This year the numbers are almost identical at 1,470. This masks the intermediate years when the number of planners in the group peaked at 1,630 in 2000.

Leo Wassercug, principal of Look Research, calculates that allowing for amalgamations, 62 of 1999’s Top 100 (including 41 of the 1999 Top 50) have appeared in all four Top 100 lists. Or, of the original 1999 Top 50 only five are missing in 2002. These are GIO, Harts Securities, Chapel Road, Deutsche Financial Planning and Saxby Bridge. The other ‘missing’ groups are accounted for by the major banks shuffling their networks’ structures. For instance, both Commonwealth and Westpac have variously reported one, two and three bank branch-based networks.

“So there is considerable stability and continuity in the industry despite all the substantial and well-publicised changes and dynamism over the years,” Wassercug says.

It is not so much the identity of the original Top 50 that has changed, but their ownership, names and structure.

Apart from the various mergers and restructuring, GIO, Deutsche Financial Planning, Godfrey Pembroke and Bridges were all sold. The first two disappeared altogether while the latter two have retained their identity. Associated Planners and Morgans, previously privately owned, now have substantial shareholdings by institutions. Count has listed. Deakin and Clearview are the new names for NRMA Financial Planning and Money Planners.

In terms of additions and deletions, this year has been more stable than previous years with only six dealer groups dropping off and nine joining the table.

In 2000, 14 dealer groups left the list and 13 joined. Last year saw 19 departures and 23 new entrants.

These numbers are not precise as the large banks have amalgamated and split and re-named their various bank branch-based networks from year to year.

Wassercug has counted the changes as a single network regardless of its identity from year to year.

“Sometimes dealers that should have been included in the Top 100 were not simply because we were not aware of them. Sometimes this may be due to the dealer deliberately choosing to keep a low profile.”

He adds that many dealers dropped out at the bottom end because they were too small to make the cut-off as other dealers outgrew them.

“Sometimes the difference between making it and missing out is literally one adviser.”

Of the Top 10 dealer groups this year, five featured in the Top 10 of 1999 — AMP, Count Wealth Accountants, Westpac Financial Services, AXA Financial Planning and Commonwealth Financial Planning (a combination of the 1999 third-ranked Commonwealth Personal Bankers and the 1999 21st ranked Commonwealth Investment Consultants).

Of the five that have moved off the Top 10 of 1999, Colonial Financial Services (ranked fifth in 1999) is Commonwealth Financial Solutions. Lend Lease Financial Planning (seventh in 1999) is Apogee Financial Planning (ranked 14th this year). Bleakleys (eighth in 1999) is now part of Partnership Planning (39th this year) following a merger with Advisor Investment Services (29th in 1999).

MLC Financial Planning (ninth in 1999) and Financial Wisdom (10th in 1999) are this year ranked 15th and 12th respectively.

The newcomers to the Top 10 since 1999 are: Professional Investment Services (PIS) — ranked second and joined the top 10 in 2001; Garvan Financial Planning — seventh, joined in 2001; Charter Financial Planning — eighth, joined in 2000; and National Australia Financial Planning — nineth, joined in 2000; and ANZ Banking Group ranked 10th.

PIS has demonstrated the most dramatic climb since the Top 100 started. In 1999 it was 14th with 239 advisers. By 2002 it was ranked second with 1,284 advisers. Its funds under advice (FUA) has grown from $1 billion to $5.3 billion. Another notable rise in FUA is RetireInvest ($3 billion to almost $10 billion) with adviser numbers increasing from 230 to 290.

At the lower end, firms such as BDO Kendalls, Bodinnars and Gannon Growden Schonell have slipped in and out of the Top 100.

In comparing the years, Wassercug notes that the Top 100 is ranked according to the number of advisers at the end of June each year.

“This measure of size does not indicate the quality or profitability of a dealer. More meaningful rankings would result from using such measures as client funds under advice or average client funds per adviser,” he says.

However, all too many dealers literally don’t know how many clients they have nor how much FUA they are looking after, while others refuse to disclose this. On the other hand, everyone discloses the number of advisers, so I have used it as an objective measure.”

The average size of the Top 100 dealer group has grown from 117 in 1999 to 140 now. The table above shows some of the variations in the Top 100 over the years, as well as some of the significant changes.

Many of our observations in 1999 remain true today, notably that Australia’s financial planning industry is still dominated by large financial institutions.

In 1999, just under three quarters of the 11,400 financial planners covered in the Top 100 survey were part of a dealer group owned by a major financial institution (banks owned 22 per cent and fund managers 50 per cent).

This year, 70 per cent of the 14,054 financial planners in the Top 100 are part of a major financial institution. But the composition has changed with banks owning 35 per cent and fund managers another 35 per cent.

One in five planners in 1999’s list were accountants. This year the figure is 23 per cent.

Another factor that has influenced the composition of the Top 100 over the years are the stockbrokers.

“There are grey areas in sorting out how many of their authorised reps actually do genuine financial planning and those who merely do stockbroking/stock picking. The important point here is not methodology but the trend for stockbrokers gradually converting their advisers into financial planners,” Wassercug says.