Centrepoint Alliance hot on heels of 3 major licensees

Centrepoint Alliance has the opportunity to sneak up from behind while the major licensees are distracted, according to a recent broker note.

A Veritas broker note at the end of May on Centrepoint Alliance described how the licensee is Australia’s fourth-largest licensee behind AMP, Insignia and Count, with 557 advisers and 208 self-licensed firms under its brand.

While this is a smaller market share at 3.6 per cent, Veritas noted AMP has reported financial losses in its advice division, Insignia recently appointed a new CEO in Scott Hartley and has seen heavy share price falls, and Count is distracted transitioning Diverger clients into the brand post-merger.

All three have lost more than 100 advisers since 1 July 2023, while Centrepoint has lost 42 but, crucially, gained 89 which puts it a net positive of 47 advisers for the financial year to date, the only one of the four to do so.

“The majors are distracted – AMP, Insignia has integrated MLC, banks have all fled and even the high-quality merger of Diverger and Count will keep them internally focused,” the note said.

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“Centrepoint operates in a market with major competitors struggling to hold onto advisers and many distracted by various issues. We believe Centrepoint is far better able to recruit and retain advisers than others.”

The most recent weekly Wealth Data adviser numbers as of 30 May show AMP lost six advisers and Insignia lost two, while Centrepoint gained two.

Discussing this with Money Management, chief executive John Shuttleworth said: “This disruption creates market opportunities for us. For example, when two firms merge there are advisers who hold off joining it until there is stability. You need that recruitment to offset natural attrition so you can be in a position for losing advisers for 12–18 months. 

“We say we want to be seen as the stable licensee in a sea of turmoil, people want to have that stability and trust from their licensee. We live and die by our service quality and ours has been very consistent. We get a lot of referrals come to us.”

Referencing why it is able to retain advisers so well, Shuttleworth cited the firm’s national presence across all states, the quality offering and in-house technical support. Offerings in this area include help for advisers with technology, professional development and education, compliance, registration maintenance and practice management.

Another route of growth would be inorganic growth via bolt-on acquisitions, having acquired Queensland advice firm Financial Advice Matters in December 2023. At the time of the acquisition, the firm had 1,450 client households and funds under advice in excess of $1 billion with eight offices across Queensland.

Veritas said: “These services enable Centrepoint to acquire bolt-on acquisitions within its existing B2B customer base of advisers that operate under its licence (but are independently owned) and self-licensed, independent players that might use some of the services that Centrepoint provides. This is a far lower risk than acquiring from scratch (or in a massive conglomeration) and enables culture/timing compliance and price to be carefully matched up before any acquisition talk.”

The broker concluded the firm is “well-positioned to prosper” in the second half of the year and beyond. Over the past year to 30 May, its share price has returned 42 per cent. 

“Centrepoint Alliance is well-positioned to prosper with an expanded adviser base following through into the second half of 2024 and beyond, driving sales and EBITDA growth. It will benefit from a full half contribution from Financial Advice Matters and a good recruitment pipeline.”