Collins House: tradition meets innovation

Collins House Financial Services (CHFS) is the creation of one of Melbourne’s oldest stockbroking

firms and one of Melbourne’s high-profile financial planners. As John Wilkinson discovered, the recently formed group has taken an unusual approach to operating policy.

Collins House Financial Services (CHFS) is the creation of one of Melbourne’s oldest stockbroking

firms and one of Melbourne’s high-profile financial planners. As John Wilkinson discovered, the recently formed group has taken an unusual approach to operating policy.

It is no secret that many financial planning firms like to see action on their client’s accounts. It gives the client the impression they are being looked after … and it generates fees for the planner.

Collins House has taken an opposite stance. Its brochure has the slogan: ‘Don’t just do something, stand there’.

“We differentiate ourselves with the belief that if a decision for a client is not done right, then we don’t do it at all,” says managing director Dominic Alafaci.

If a client has a good structure to their investments and a strategy that will meet their goals, don’t change it, he says. But if the client’s position can be improved to better their goals, then there is justification in making suggestion, Alafaci adds.

Part of this philosophy could be reflected in the Collins House client base. Many clients come from the stockbroking firm and are familiar with direct share investment, although may not be too familiar with managed funds.

Alafaci says that if adding a managed fund to a portfolio helps the client meet their financial objectives, then it is recommended. If the client is an active share trader, then the managed fund approach may not be suitable and is not recommended. These clients tend to be passed back to the stockbroker.

“Normally we recommend to clients that they should have a mix of direct shares and managed funds,” Alafaci says. “We cannot see why a client with a good blue-chip portfolio of direct stocks should sell them just to be put into a managed fund.”

He admits that having this relationship with a stockbroker, and yet operating independently of the firm, means CHFS is a unique animal in the world of financial planning.

However, not all CHFS clients come through the stockbroking operation. Many come from off the street and have had no dealings with the financial services industry other than having a bank account.

CHFS charges for retirement, wealth management and accumulation advice to executives of major companies. Alafaci declined to name his clients, but his work in this area has taken him overseas to advise senior management of Australian companies with global operations.

His company also believes in being upfront about fees and rebating them where appropriate.

“In some people’s eyes a lot of our business might be seen as doing nothing, but we view our job as being a friend and helping people with their financial matters,” Alafaci says.

“We think about the client and what is right for them. There is no pressure on the advisers to put a client into a managed fund to earn the fees.”

What is right for the client comes from experience and technical knowledge. Alafaci says that his 25-odd years of experience is being passed onto the younger planners in the firm.

His experience includes being a CPA and CFP as well as playing a role in setting the professional standards of the financial planning industry.

This experience has also been reflected in Alafaci being the runner-up twice in the Money Management Financial Planner of the Year Award.

He is quite circumspect about coming second. Alafaci’s favourite footy team is Collingwood and they have a life-long history of always being a runner-up.

CHFS is a great believer is using expertise. Alafaci says it is not unusual for lawyers, brokers, real estate agents and accountants to be bought in for a meeting with the client to discuss a particular problem or strategy.

“It is about putting together a package to solve the client’s problem,” Alafaci says. “We can’t do everything, so we bring in the specialists.”

The training program for the planners working at CHFS is done in-house and Alafaci admits it is hard work. The company avoids training sessions in exotic locations paid for by fund managers.

“I would rather the fund manager came in here (at the Melbourne office) when I wanted some information on an issue or a technical matter for our back-office people,” he says.

“I would also rather fund managers put the dollars they spend on wining and dining planners back into the clients’ pockets.”

Alafaci admits that providing a training program for a career path is hard for a small practice like CHFS.

He had trained a para-planner and a secretary to become planners, they graduate shortly. But he says what is missing is a mentoring scheme where experienced planners could help train planners.

“We are a small company and I don’t know if the way we trained our future planners is right,” he says.

“I would like to see some sort of formal apprenticeship with the mentoring system. Too many planners have spent their time taking from the industry rather than giving something back.”

CHFS outsources its compliance. “We have a strict compliance regime here, with external experts like lawyers coming to do the audit on a regular basis,” Alafaci says.

The paperwork and compliance manuals are compiled internally, using outside expertise.

“Outsourcing has been fabulous because we do make mistakes and having a person divorced from the company doing the audit means these mistakes are picked up.”

Alafaci says compliance is used to the company’s advantage when dealing with clients. Alafaci says it has meant CHFS was able to use a lawyer to draft meaningful documentation for clients.

CHFS is still a young firm, despite the considerable experience Alafaci brings to the organisation. Because it is still growing, there are no career paths for planners in the organisation at present, but Alafaci has his eyes on expansion all the time. He says the door is always open to a good planner with their own clients.

Vital statistics

Collins House Financial Services

Advisers: 6 by July

Funds under administration: $200 million

Ownership: 50% by Dominic Alafaci

50% by the equity holders of E. L. & C. Baillieu Stockbroking

Founded: 1999

Key figures: Chairman, George Varlamos

Managing director, Dominic Alafaci

Master trust: AM, Deutsche Asset Management, Fiducian

Research: Morningstar and Baillieu Stockbroking