Dealer groups buffeted by FOFA volatility

With increased volatility, there have been many changes in the dealer group space, both in terms of adviser numbers and funds under advice. Angela Welsh reports on events at the top of the table.

This was a year dominated by the large institutions, both in terms of adviser numbers and total funds under advice. Dealer groups backed by institutions experienced the most growth, and competed among themselves to attract advisers and grow their market share. With planners unsure of how the Government’s Future of Financial Advice (FOFA) reforms will roll out, uncertainty was the order of the day.

Planner toss and churn

Lonsdale Financial Group, Genesys Wealth Advisers and Australian Financial Group Financial Planning all dropped off the Top 20 list, not due to a noticeable decline in adviser numbers, but because other dealer groups upped the ante.

In terms of overall number of advisers, AMP Financial Planning (AMPFP) retained its chart-topping position this year, with a total of 1,479 advisers as at March 2011. This position had become even more significant since AMP acquired AXA earlier this year.

AMPFP managing director Michael Guggenheimer said the growth in adviser numbers was due to AMP’s “strong planner proposition that is attracting both new and experienced planners,” with the Horizons Academy supporting consistent hiring. 

Next in line in this year’s Top 20 was Professional Investment Services (PIS), with 1,227 advisers. Even with a reduction of 127 advisers compared to the previous year, the firm stayed at number two when ranked by overall planner numbers.

Millennium3 Financial Services moved forward one place between 2010 and 2011, while Commonwealth Financial Planning (CFP) made a more dramatic leap of 86 advisers.

However, one of the biggest jumps in the Top 20 was that of Sentry Financial Group, which introduced an additional 202 advisers to its team and surged forward to 14th place – up from 27th place the previous year.

Aon Hewitt more than doubled its number of advisers, growing from 156 to 335, which allowed the group to jump from 34th to 17th place. 

Although Count Financial shed 112 advisers and dropped two places (which may be attributed to the dealer group floating off part of its operations into Count Plus), the dealer group still maintains one of the top positions on the table.

GFC jitters remain

After coming out on top last year in terms of funds under advice (FUA), Macquarie Equities slid back to second place, with a $928 million dip in FUA. Despite this, the group still advised on over $38 billion, but the dramatic change in FUA during this period was directly correlated to market movement over that time, according to head of Macquarie Private Wealth, Eric Schimpf.

“This is along with some routine internal activities to review and close dormant accounts that were no longer being used by our clients,” he explained. 

“During sideways moving markets like we are seeing now, what we are hearing from our clients is that they value quality advice and insights from experts about what is happening in financial markets and the global economy,” he added.

Volatile markets haven’t stopped AMPFP, which topped the rankings for total FUA with almost $42.6 billion in funds as at end of March 2011. This was an increase of over $3.9 billion from last year’s figure. 

“We have seen an increase in our planner numbers and an increase in planner productivity, which has been a major contributor to the growth in AMP Financial Planning’s funds under advice,” Guggenheimer said.

PIS came in fifth with $21 billion of FUA – a figure $500 million higher than last year’s FUA. However, the group slipped back one place on its 2010 ranking.

Group managing director Grahame Evans said there has been virtually no market movement for the year, with the group writing about $1.1 billion in new investments during that time.

“It has been a bit of a non-event this year, if I could put it that way – no help from the market, inflows have been down substantially on what they were,” while outflows haven’t helped the situation, Evans said.

Another contributor was that the firm “has not been acquiring any businesses so that increase is just organic all the way through,” according to Evans.

RBS Morgans increased its previous year’s total by an impressive 68 per cent, boosting its funds from $19 billion to $32 billion year-on-year. This allowed the firm to leapfrog a couple of dealer groups to take out third place. 

CFP gained 4 per cent in FUA in the year, but was pushed back to fourth place by strengthened competition. 

Younger identified two factors for the growth in FUA, adding the group had experienced “a certain degree of attribution to market, but not a lot over the last 12 months”.

“The other component of growth was reflected in our net flow position of new dollars for the year, which is really predicated on access to the Commonwealth Bank client base,” Younger explained.