FlexiPlan’s $6 billion man: Mulcahy’s five year plan

With less than a month in the managing director seat, Garry Mulcahy has already set his sights on new opportunities for the FlexiPlan master trust operations. Samantha Walker explores some of those plans.

Garry Mulcahy has big plans for FlexiPlan. In five short years, he reckons he can build a business with $7 billion under administration, more than tripling its current $1.65 billion under administration.

Others at MLC think it's a done deal. MLC recently bought the last significant tranche of shares in Perth-based FlexiPlan, purchasing the last 20 per cent from founder and former managing director Sue Thomas.

Thomas says she will stay with the group in a consulting role, leaving Mulcahy, who was previously project director of MLC's MasterKey product, as FlexiPlan's new managing director.

FlexiPlan has been at the forefront in the development of master trusts in Australia. It was FlexiPlan, along with another Perth-based master trust Asgard, which cornered the market in the early 1990s. And recent Morningstar figures suggest that the players have retained market dominance, with both Asgard and FlexiPlan ranking in the top three in fund inflows for the three months to the end of March. In fact, the same Morningstar figures show an 83 per cent rise in funds under administration for FlexiPlan in the past year, the fastest growth of the 25 master trusts surveyed.

FlexiPlan offers particular expertise in the superannuation market, through its private deed service for self-managed funds and its public offer FlexiSuper Fund.

Mulcahy says MLC bought FlexiPlan to provide a broad range of services to the adviser market. He says FlexiPlan is well positioned to take advantage of both its own product developments and MLC's vast distribution capabilities.

"We see FlexiPlan not so much as a product, but more an enabling service for advisers and we'll be continuing to develop enhancements to the business to maintain its rapid growth rate," he says.

In June 1996, before MLC began its gradual acquisition of the business, about 150 advisers used FlexiPlan. Since then, MLC says the number of advisers supporting the business has grown to more than 850.

MLC's own brand distribution network includes 1,200 advisers from the four MLC-owned dealerships - MLC Financial Planning, Garvan Financial Planning, Lend Lease Adviser Financial Planning and Godfrey Pembroke. It also includes 2,000 independent advisers currently using MLC's products.

"FlexiPlan is currently used by both MLC aligned distribution networks as well as by independents. The bulk of the money, though, is currently coming through from the independents," Mulcahy says.

Mulcahy says the challenge for FlexiPlan is: "to make sure the offering is attractive enough for advisers".

Mulcahy acknowledges that his involvement in the development of MLC's MasterKey product played an important part in his appointment to the top job at FlexiPlan. He says the recent launch of MasterKey positioned MLC's retail products alongside, but not in competition with, FlexiPlan.

"That's our deliberate strategy - to have both FlexiPlan and MasterKey positioned in the market so that they are complementing each other. It would be ridiculous to have it otherwise. You might find the same adviser using both for different clients, because of the particular needs of the client. I think one of the reasons why I was appointed to this role was because I've got a very clear understanding of where both FlexiPlan and MasterKey are positioned in the market. It is not our intention to overlap the businesses," he says.

Mulcahy says part of FlexiPlan's rapid growth will come about from a series of product enhancements, though MLC will not be "inflicting anything on FlexiPlan".

Instead it will leave the business largely to its own management.

Currently on the drawing board at FlexiPlan is an e-commerce capability, which Mulcahy says will draw on the strength of FlexiPlan's IT systems.

"E-commerce is being worked on now, though it's such a big animal and consequently, we're moving on it in a gradual process," he says.

While Mulcahy will not rule out FlexiPlan moving into the increasingly lucrative corporate superannuation market, he says it is not part of the current business strategy.

This puts it at odds with competitor Asgard, which reportedly hopes to increase its superannuation business from current levels of $100 million to anywhere up to $1 billion in the coming year.

Mulcahy is non-plussed and says that MLC already offers services to these clients.

"MLC currently has a range of product offerings, such as its joint venture with Vanguard, which are aimed at the corporate superannuation market. However, if in future there is a need to target this market, we will," he says.

Nonetheless, it is clear that both Mulcahy and MLC are sold on the promise of master trusts in financial services.

"It is part of the evolution of the industry. Advisers are looking for products which provide a range of business services, rather than single products," he says.

Mulcahy believes this will ultimately drive MLC's distribution capabilities.

"Planners are getting more clients and less time. That's why we purchased FlexiPlan and that's why we're repositioning MLC's retail products through MasterKey. We now feel MLC is pretty well positioned in the market to reap the benefits of this."