Crunching the numbers

While planner numbers suffered among some dealer groups during the global financial crisis, most notably with several banks cutting advisers from their planning arms, many dealer groups continued to build their adviser base.

However, recovery through 2009 to 2010 has been irregular among the largest dealer groups, with the Money Management Top 100 Dealer Groups survey revealing that while both non-aligned and bank dealer groups have added planners, growth has stagnated in others and plummeted in some.

Despite uneven adviser growth and losses among some dealer groups, funds under advice (FUA) continued to rise, prompting some to suggest that the bounce-back in markets is due more to the recovery of wealth portfolios from the lows of the financial crisis.

Stagnation

A survey of the top 15 dealer groups reveals that between March 2009 and March 2010 more than half either grew marginally stagnated or declined in planner numbers.

Charter and AXA Financial Planning have only added two planners each since March last year, while Garvan and MLC Financial Planning (GWM Adviser Services) lost three planners between them during the same period. Macquarie only added seven further financial planners between March 2009 and 2010, the same number as the year before.

Adviser growth at Securitor, which listed a further 18 planners under its umbrella between 2008 and 2009, has slowed, only adding a further eight since then, while Financial Wisdom lost six planners between March 2009 and 2010 after adding seven during the previous period.

The greatest losses among the banks has been from ANZ, which culled a further 69 planners between this year and last after losing 30 planners in 2008-09. The losses have taken ANZ out of the top 15 dealer groups in terms of size, with only 311 planners counted among its ranks.

A spokesman for ANZ pointed to the financial crisis and reduced demand for the drop in planner numbers, and said the bank was “comfortable with its current levels” of planners.

Westpac too has continued to decline, losing a further eight planners from its financial planning arm after cutting 133 advisers in 2008/09.

Among the independent dealer groups, Count Financial has also declined, losing a further 18 planners, taking it to 842 total authorised representatives.

However, some dealer groups among the top 15 have grown rapidly in the last year, with Wealthsure in particular taking on 102 planners, the highest growth rate of this year’s survey, raising the dealer group to 13th place. It ranked 18th in 2008-09.

Dealer group head Darren Pawski attributed the growth to the recruitment of two practice managers in Sydney and Perth, which doubled Wealthsure's practice management offering. It also increased support staff numbers in the past year, Pawski said. Wealthsure has recruited planners from Sydney, Victoria and Queensland.

AMP Financial Planning (AMPFP) has now become the largest employer of financial planners in the country, with the bank-aligned dealer group adding 75 planners between March 2009 and 2010, increasing numbers to 1,423 net authorised representatives.

The rise in AMP planners continues a trend started with the launch of AMP’s Financial Planning Academy in late 2007. AMPFP added 72 planners between 2007 and 2008, and a further 54 between 2008 and 2009, reversing continuing adviser losses that saw numbers drop from more than 1,400 planners in 2003 to 1,222 by 2007.

Michael Guggenheimer, managing director of AMPFP, put planner growth down to the three-pronged approach of placing specialists around the country to sound out people who were interested in establishing financial planning practices under the dealer group, developing existing practices and creating the AMP Horizons Academy.

“We want to provide more advice to more Australians, and we want to continue to attract quality candidates who want to work with AMPFP. Over the last couple of years, our growth in planner numbers has been pretty consistent as we executed [that] strategy,” he said.

However, the ascension of AMP to the top spot is largely due to the underperformance of Professional Investment Services (PIS), which has been the hardest hit of all dealer groups this year, losing 130 financial planners.

PIS’ adviser number growth has been slow for the last few years, with the group dropping to 77th position in terms of the growth rate of its adviser base in 2008, before adding 48 planners the following year.

Millenium3 has also continued to grow its adviser base, signing on 63 planners this year, boosting its numbers to 841. The dealer group has taken on 242 planners in the last two years, or 28 per cent of its current numbers.

Commonwealth Financial Planning and NAB Financial Planning have also boosted their adviser numbers, adding 56 and 61 advisers respectively.

FUA

However, it is clear that the growth or contraction of advisers is not affecting growth in funds under advice (FUA).

Macquarie Equities has now overtaken AMPFP to be in the top spot in terms of FUA this year, boosting its funds by more than $6 billion to $38.96 billion, despite adding only seven advisers. The group’s FUA is up from $3.7 billion in 2008, when it was ranked 25th.

Macquarie launched an Asian private wealth business in March 2008, tapping into the skyrocketing high-net-wealth client base in South East Asia. It also recruited staff aggressively in 2009, boosting insurance, agribusiness and resources capabilities, as well as taking a key stake in WHK Group in March last year.

This shift means that AMPFP slipped to 2nd place, but it still closely followed Macquarie with $38.6 billion in FUA. AMPFP added $5.8 billion in FUA during the year. A combination of growing its adviser base and a market-related improvement was responsible for the growth in FUA, according to Guggenheimer.

Commonwealth Financial Planning also experienced a market related lift of approximately $5 billion during the year, with Colonial First State advice business general manager Paul Barrett attributing the rise to increasing investment returns, as well as the increasing productivity of the group.

“Commonwealth Financial Planning has grown its productivity again, and in terms of its peer group has been an outstanding example. We’ve achieved a net flow of the year of $1.7 billion,” he said.

PIS, despite losing 130 planners during the year, still increased its FUA by nearly $4.7 billion between 2009 and 2010, and boosted its rank from sixth place to number four of the top 15 dealer groups by FUA.

PIS chief executive Robbie Bennetts told Money Management in February this year that the group is reaping significant investment inflows. PIS is developing alternative sources of revenue, including the provision of banking products, and is in talks about possible joint venture agreements with fund management groups.

However, some dealer groups have continued to suffer, with RBS Morgans experiencing a decline of $6.9 billion in FUA during the year, taking it from third to fifth place with $19 billion. FUA for the group dropped from $32 billion in 2008 to $25.9 billion last year.

Securitor lost $2.8 billion from March 2009 to 2010, taking it out of the top 15 dealer groups in terms of FUA to 22nd place at $7 billion, while ANZ Financial Planning plunged to 23rd place for FUA from 10th place in 2009, losing $2.1 billion.