Genesys focusing on its members

It’s back to basics at Genesys Wealth Advisers as the group tries to leave the distractions of multiple ownership changes behind and refocus on the needs of member firms.

Relatively new chief John Saint is trying to shift the focus of a group that has been “a little more inwardly focused in recent times”, following changes in ownership which saw the group sold to Challenger and then sold again to AXA.

“There’s been turnover in systems and processes to embed those changes, and during that time it took some of the executive management focus away from member firm relationships,” Saint said.

“From my perspective I think most of that is behind us now.”

But the distraction has taken its toll, resulting in a number of member firms defecting to Fortnum Financial Group, the business established by the former chief of the group, Ray Miles.

“I concede that a number of member firms have been disenfranchised in the past, and with lots of activity from others to get people to move, I can see why they did,” Saint said.

“I don’t agree with it obviously, but that’s their choice. That’s part of the open architecture model that we have — people can move and take their clients with them.”

Saint said on 30 June, 2010, the group had 335 advisers in 150 member firms — including 34 under the Quadrant Securities banner. He said that was a fall in adviser numbers from about 360 at the end of 2009, but couldn’t put a figure on how many member firms had left.

“There’s no doubt that we’ve had an up and down last six months or so,” Saint said.

Since joining the group as chief executive late last year, Saint said his focus had been working on improving the focus on member firms, including making a commitment to visit every member firm by the end of the year.

“What we’ve been focusing on is building a solid foundation for what it is that we can do for our member firms and our businesses,” Saint said.

“We need to deal with customers first in our business as well. For me that’s one of the things we’ve tried to dial up.”

Genesys advisers made clear some of their frustrations at their annual conference in February — including with the Genesys research team. Many of the group’s head office functions have now been merged with AXA teams, including research, marketing and compliance — though advisers are still assessed against Genesys-specific benchmarks. Saint said advisers had been happy with the results. In particular, Saint said he had received “unprompted congratulations” on improvements in the research team, which advisers said was now “more responsive”.

The advisers’ frustrations were aired through the national advisory council, and there have been some changes there, with chairman Andy Murdock stepping down. Another symbolic change for the once independently owned dealer group is the disbanding of its head office in Sydney’s northwest suburb of Epping, with the group to move closer to parent company AXA in the city by September.

While Saint said the distractions of recent acquisitions were now behind Genesys, he did acknowledge the level of uncertainty about AXA’s future ownership.

He said while he couldn’t promise the new owner wouldn’t move the goalposts yet again — including changing Approved Product Lists, systems and processes — he remained confident that the Genesys he was trying to build would remain intact.

“They [the new owners] can do that if they want to, but I think it would be a silly thing to do,” Saint said.

“It is a risk — but why would they pay bucketloads for these businesses if they’re just going to damage them all?”

Some of the initiatives Saint has introduced during his tenure have been programs designed to increase the likelihood of adviser retention through this uncertain period. Earlier this month the group outlined a new loyalty scheme aimed at encouraging firms to commit to the group for periods of up to five years. It was hoped advisers would sign up to at least some aspect of the remuneration program by 19 July. As yet no firms have accepted the offers, and Saint said the take-up had been affected by the second part of the loyalty scheme: an offer of equity in the Genesys business.

“I didn’t ever expect anybody to take up the first part until they heard the second story,” Saint said.

“But the second story came out, they’re listening, we’re having conversations. Then we’ll see how we go with people signing up.”

Under the scheme the group is offering close to 10 per cent equity in the business to advisers via a loan-funded share plan, with up to 10 million shares on issue with an initial vesting period of three years.

While “not a silver bullet by any stretch”, Saint described the equity program as “another building block in the foundations of what Genesys represents in the future”. He said the offer had been “terrifically well received”, with official documentation to be issued in the coming weeks.

“We’re very confident in the level of engagement,” Saint said.

While the offers do include increased incentives for advisers who stay with the group for periods of up to five years, Saint prefers not to see them as lock-in provisions, but simply commercial arrangements that can be broken (albeit at a cost) by the advisers if they wish.

“If they want to stay, they can stay, if they want to go, they can go. Nobody twisted anybody’s arm to sign anything.”

Saint said the rebuild over the past six months had given the dealer group “a solid foundation for growth”.

“I think we’ve changed, I think we’ve got clear leadership. The strategic plan we had in place was a good one — now we’ve got to focus on making member firms successful,” Saint said.

“Their success will make us successful.”