Bridgeport plans for next level of advice

Bridgeport executive director Robert MC Brown is frustrated when Bridgeport is described as a dealer group. He says that view ignores the essence of the group and where it actually differs fundamentally from dealer groups.

Instead, Brown describes the firm as a new style of financial advisory business based around a larger multi-disciplinary approach.

More radically, Brown envisages the day when the group will be such a broadly based financial advisory business that "we will employ lawyers, merger and acquisition advisers, and management consultants to offer high level advice across a broad spectrum of services.

“This will resemble a European private bank in its spread of advisory business. Our clients have these needs,” Brown says.

However, the areas he excludes from moving into are funds management and developing products, as the group wishes to remain advisory and retain its independence.

He defines the group's main point of departure as its drive to be "a centre of technical excellence that is at the forefront of the development of a new industry of advice”.

“Our team is comprised of highly qualified professionals whose culture is to offer services in a team approach across a wide range of disciplines. Our survival depends on the technical quality of our skills,” Brown says.

He predicts that if they want to survive, financial advisers will need to model themselves on Bridgeport's structure and philosophy.

"The financial planning industry must move up-market. They cannot compete with banks and other large financial institutions," he says.

Bridgeport's origins go back to 1973, but the group today is the outcome of a 1999 merger between the Chancellor Investment Group, superannuation consultants Robert M.C. Brown & Partners, and Darryl Pike's management consultancy business.

As a result of bringing together these elements, Bridgeport encompasses a broad package of investment and wealth creation strategies that includes financial, insurance and superannuation solutions.

The flat structure comprises three executive directors (and principals) at the top — Brown, Pike and Garry Avis. Together, they own 70 per cent of the group, while Zurich holds the remaining 30 per cent.

There is no chief executive or executive chairman, although Geoff Ashton has a role as non-executive chairman.

The group's divisions are split into financial planning, corporate benefits, research (including training and compliance), risk management, equity management and finance. The intention is to broaden the base into estate planning and finance, including loans, refinancing, mergers and acquisitions.

Of the 40 employees, 30 are professionals, and all advisers are salaried and some are on incentive packages.

Brown says the major shareholders are committed to offering shares to employees over the next two years. "We have no intention to list our group on the Australian Stock Exchange, as it complicates our business and we do not wish to lose control,” he says.

Bridgeport has over $1.6 billion of funds under management, three-quarters of which is from high-net-worth individuals (those with over $500,000 to invest) and one-quarter from corporate superannuation assets. The beauty of the latter, Brown notes, is its ability to generate personal work with senior management.

Bridgeport's clients include major public and private companies, as well as wealthy individuals. It is also specifically targeting younger investors where it has introduced several programs.

Seven small accounting firms are licensed to Bridgeport, contributing some 10 per cent of the group's revenue. Pike anticipates this could reach 20 firms within two years. Many charge fees while others get brokerage, but Pike says the preference is for fees.

Pike does not envisage Bridgeport itself merging with an accounting firm despite the fact it has had the opportunities to do so.

Rather, it maintains the links (with accountants??????), as few dispute that specialised professionals will increasingly need to call on the resources of other industry experts to deliver a sophisticated level and broad range of services.

"That's where Bridgeport comes in. We can provide a pool of personnel and expertise enabling contributing partners to enhance a business without infringing their independence," Pike says.

Looking ahead, Brown is convinced that it is the accounting profession that will prove to be the key players in the financial planning industry due to their huge influence over their client base.

For this reason, Brown is enthusiastic about the opportunities presented by the new Financial Services Reform (FSR) Act.

"Whatever the Government's stated intentions in pushing forward with the FSR Act, the result is going to be seriously detrimental to the interests of most financial planners and seriously favourable to the interests of the accounting profession,” Brown says.

Brown explains that while the aim of the legislation is to create a profession "out of what is essentially a gaggle of superannuation and investment product order takers, the accounting bodies can offer a group of professionals which fits perfectly into the Government's desired mould".

So Brown anticipates the demise of the typical small independent financial planner.

"Unfortunately for the public, they will be replaced by a bank officer or tied agent working for a large institution."

Alongside this market segment — representing around 90 per cent of retail financial service business will be the "rise of the true adviser, most of whom will be connected to practicing accountants."

Bridgeport has its strategy in place to be a key leader among this group.

Vital Stats:

Name: Bridgeport

Founded: originally in 1973

Ownership: directors 70 per cent, Zurich 30 per cent

FUM: $1.6 billion

No. of Financial Planners: 30

Key figures: Robert MC Brown, Garry Avis, Darryl Pike (principals)