A bridge to high income earners

While employing salary based financial planners is experiencing something of a boom at the moment, the concept is nothing new. JASON SPITS speaks to one group taking a different slant on the same theme, Charterbridge Davey.

While employing salary based financial planners is experiencing something of a boom at the moment, the concept is nothing new. JASON SPITS speaks to one group taking a different slant on the same theme, Charterbridge Davey.

Charterbridge Davey recently blew out the candles on its first birthday cake, after a merger at the end of March last year joined the two groups.

The newly formed group, which focuses on the niche sector of doctors, lawyers, dentists and other high income executives, also jealously guards its procedures and client base.

Unlike other dealer groups, there are no planners outside the group hanging out their own shingle and sharing sign-writing space with the dealer. As such, there are also no contracts or franchise concerns and planners who join the group are encouraged not to bring existing clients with them.

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Head of consulting, Michael Clayton, says planners are brought into the fold, and after adequate training are set to work with a list of clients which grows primarily through referrals.

Working out of offices in Melbourne, Sydney and Brisbane, the group truly breaks the mould in what it means to be a dealer group.

The history of the two groups follows similar lines. Charterbridge was formed a decade ago with a focus on high income executive clients. The group was headed up by Venn Williams, now managing director of the combined group.

Davey kicked off in 1972 and was headed by Clayton from 1991 until the merger. It also focused on high income clients but chose to concentrate solely on doc-tors, lawyers and dentists.

"There was no crossover in terms of the market both firms were pursuing, but rather the common ground was an aim to make high income clients into high net worth clients," Clayton says.

"There were issues of economies of scale with the sharing of IT, research and portfolio services across the board, which were also considerations in the deci-sion to merge."

In doing so, the client base has reached between 1,200 to 1,500, dependent on what services the clients use, with the lower figure representing the core of clients who use all the group's services.

"Apart from financial planning, we also have insurance brokerage, finance bro-kerage, taxation and accounting services in-house. These are all integrated and part of the full service we offer," Clayton says.

"We see ourselves as more of a financial services house than a dealer group, working with that part of the market which stock brokers and private banks also really wish to get to. As such, our service and business has never been fran-chised, to allow us control over the quality of the advice."

In fact, all the planners within Charterbridge Davey are employees of the group renumerated by salary and bonuses, with a complete no commission, fee driven ap-proach.

"We own the client, while everyone has an employee contract with bonuses related to volume, quality and client retention," Clayton says.

"This is a key driver for us as every relationship is critical given the size of the market we pursue and the comprehensive nature of our services."

The group is made up of a number of client service teams containing a senior ad-viser overseeing two financial planners, all proper authority holders.

The total number of proper authority holders within the group, across the three offices, numbers 30, however, Clayton says advisers wishing to join the group have certain restrictions placed on them.

"We never take in anybody who wants to bring in their existing client base, as it would be incompatible with our whole approach," Clayton says.

"Like most dealer groups we also seek tertiary qualifications and planners must have or be close to achieving Certified Financial Planner (CFP) status."

There is also in-house training which can take from three months to three years to complete, dependent on the skills the planner has when joining the firm. The training covers the internal workings of the group in the areas of tax, superan-nuation, insurance and financial planning, and ties into experience and back-ground of the planner.

After training, planners can then move into the adviser role, however, all em-ployees take part in an ongoing weekly training session and quarterly two day meetings, which sit in place of the usual conference system.

Clayton says this training is particularly crucial for the group, since there are many areas which Charterbridge Davey deals for which new recruits lack un-derstanding.

"By virtue of what they are called on to do in previous jobs, most planners are weak in the area of taxation, which is a concern for our clients who are high income earners and thus high tax payers," Clayton says.

"Superannuation is also another area they can be weak in. It tends to be these two areas we need to work on as detailed tax or superannuation knowledge is not applicable to the whole market. For us, however, the advisers and planners need to be at the cutting edge of these changes."

This holistic approach to servicing clients is also reflected in the research and wrap capabilities on offer, which both have a heavy reliance on in-house re-sources.

A four person investment committee will construct the recommended list, using external research combined with on the ground meetings to reach a final set of decisions independently of any management involvement.

"We felt there was some sense in keeping the recommended list separate from the top level of management to guarantee objectivity. Management's focus is on shareholder value, while the investment committee is focused on creating value for clients," Clayton says.

"There are senior executives within the firm on the committee but no top manage-ment. The committee also reports to the board alone, as the directors within our model, and under the law, are liable for how our planners and advisers act with clients."

However even this is a further example of how Charterbridge Davey seeks to en-sure clients receive a rounded and professional service, says Clayton.

"These groups that we target need much more assistance. They are specialists in their own right and are time poor, have little financial knowledge or the time to gain it. They also have a very secure income compared with the rest of the clientele approaching the financial planning community," Clayton says.

"Given this, they recognise the need for long term financial advice. We are his-torically positioned in terms of market sector, where a lot of other financial planners really want to be."

Vital Statistics

Name: Charterbridge Davey

Advisers: 30

Funds under administration: $500 million

Ownership: Owned by a number of different interests including some of the board of directors.

Founded: Combined group - March 1999, Davey -1972, Charterbridge - 1990.

Key Figures: Venn Williams (managing director), Michael Clayton (head of con-sulting)

Research: Internal and ASSIRT

Wrap service/Master trust: own portfolio management service.

Next conference: series of seminars linked to legislation changes.