Challenger revamp fuels dealer review
Melbourne-based dealer groupQuadrant Securitiesis reviewing the 50 per cent stake held in it byChallenger Financial Services Group(CFSG) and reassessing $300 million of assets channelled into the latter’s Synergy master trust, primarily in response to the restructure of CFSG and its subsidiary companies.
According to Quadrant director John McCormack, the review stems from the recent changes to CFSG group, in particular its subsequent impact on both Challenger-ownedGarrisons Financial Planning, which has held a 50 per cent stake in Quadrant for five years, and Synergy, which split from Garrisons back in May and has $300 million of Quadrant’s First Quest platform assets.
“There have been so many changes over the past two years as a result of Challenger’s takeover of Garrisons, that we believe their priorities may have changed, and it’s therefore appropriate for us to review whether they are now the best fit, ” McCormack says.
However, McCormack stresses the review is also partly due to Quadrant’s plans to expand operations in New South Wales, Queensland and Victoria, adding the group is in discussions with some planning practices which may take a stake in it and collectively replace Challenger.
“We are reviewing equity participation in our group with the aim of improving it to fit the common goals of those involved,” McCormack says.
Garrisons managing director Kim White says the group offers outsourcing services to four or five smaller dealer groups (including Quadrant), but given it has about 70 practices and 165 proper authority holders, he says outsourcing services are not Garrisons’ core strategic business.
“We have three or four [outsourced arrangements] but it’s not the main focus of our business. We’re quietly focusing on the Garrisons franchise,” White says, but adds the group remains dedicated to servicing outsource clients.
“We’ve got some very good relationships with our outsource parties and obviously want to retain and build on these,” he says.
White says his firm has also been working towards relocating its head office from Hobart to Melbourne, with some staff transferring and others opting to leave the group, such as compliance officer Colin Dewhurst who offered his resignation last week.
As for the review, McCormack also underlines that it is only a review at this stage “nothing may change as Challenger may feel that they can work with us in a better way”. McCormack anticipates the issue will be resolved by Christmas.
Quadrant has 12 practices at present and 30 authorised representatives, accounting for over $700 million in funds under advice.
“We don’t intend to become a large dealer group; we’re happy to remain medium size. We want to remain at a manageable level, which is why we outsource a lot of our service requirements and why we are also reviewing those dealer service requirements,” McCormack says.
Recommended for you
ASIC has cancelled a Sydney AFSL for failing to pay a $64,000 AFCA determination related to inappropriate advice, which then had to be paid by the CSLR.
A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments for investments.
Inefficient data processes and systems mean advisers are spending over half of their time on product implementation and administration at the expense of clients, according to research.
With the regulator announcing its enforcement focus for 2025 last week, law firm Hall & Wilcox examines the areas which have dropped down the list in priority for the regulator.
