Glenhurst takes the dealership plunge

The history of Glenhurst Corporation has mirrored the way the financial planning industry progressed during the nineties.

First as a tied agent, then a multi-agent, it had a brief flirtation with franchising and finally secured its own dealer’s licence.

The history of Glenhurst Corporation has mirrored the way the financial planning industry progressed during the nineties.

First as a tied agent, then a multi-agent, it had a brief flirtation with franchising and finally secured its own dealer’s licence.

Glenhurst chief executive officer Anthony Kofkin started the firm in 1991 as a tied National Mutual agent.

“My father (Michael Kofkin) had been a tied National Mutual agent for 30 years, so he introduced me to Robin Daubeny at National Mutual and he became my mentor,” Kofkin says.

In a twist of fate, Daubeny now works at Glenhurst in charge of adviser development.

“National Mutual gave me the best grounding in the industry and taught me how to do things properly,” Kofkin says.

“My father had a tremendous reputation but I was always seen in the industry as Michael’s son,” he says.

Keen to distance himself from this image, Kofkin turned the company into a multi-agent practice three years after starting. He also studied for a financial planning diploma and the company grew — expanding into the area of corporate superannuation.

Apart from distributing National Mutual products, Glenhurst also sold for Colonial and this led to the company taking up one of the Colonial franchises.

Kofkin was part of the second wave into the Colonial franchise scheme, after many of the company’s tied agents left in the first year.

“One thing the franchises did was encourage a disciplined approach to financial planning,” Kofkin says. “It also bought professionalism into the agency business.”

Kofkin says being a member of the franchise group allowed him to see how other agents worked.

Glenhurst continued to expand during the franchise period as the multi-agency, which was still operating, had about six advisers working in the area.

“Through Colonial we got to put funds with other fund managers and that helped Glenhurst grow,” he says.

After looking at what other adviser groups did, Kofkin could see areas which other planners ignored.

“A lot of advisers avoid estate planning,” he says. “They don’t see any money in it, so they don’t write the business.” Glenhurst now has 17 estate planners to exploit this opportunity in the financial planning business.

By early last year, the multi-agency had grown to 20 advisers. This growth led Kofkin to think about the structure of Glenhurst.

“About a year ago, I made some massive changes to the company,” he says. “I moved the proper authority from Colonial to Protax with the aim of getting our own dealer’s licence.”

Kofkin realised the management structure also needed looking at.

Glenhurst is, in effect, a group of companies. The retail arm operates as a multi-agency, for example.

“I was finding it difficult for the company to be run by a practitioner and to have the chief executive as a practitioner,” he says.

“I was spending 30 per cent of my time with clients while trying to manage the company and maintain the compliance structure. I was getting thin on time.”

Glenhurst also wanted to have a team of advisers that would grow with the business. That meant spending time on training because Kofkin didn’t want a team of advisers who just sold products.

Training advisers, which takes place on a weekly basis, has given them new goals to aim for.

“We want any adviser to feel comfortable with handling our best client,” Kofkin says. This has seen all advisers training to DFP standard with a view to eventually becoming CFPs.

The first step of the restructure was to work towards selling a percentage of the company to investors who could put something into the business. It also created a structure where advisers could buy into the company. The plan was to sell 25 per cent of the company to management and advisers, with Kofkin holding the remainder of the shares.

To put a true value on the company, always a difficult task, a figure of 0.8 per cent of gross turnover was applied. As a result, 10 shareholders bought shares, including all of the management team, and 38 per cent was sold to meet the demand.

Kofkin says all the money from selling shares in Glenhurst was re-invested to grow the business. “We need a cashflow, to employ more staff members to handle the business and the ability to invest in technology,” he says. The money raised has also allowed Glenhurst to maintain its policy of being debt-free.

The plans to expand the staff to 100 advisers lead Glenhurst to recruit Paul Ryan from Mercantile Mutual to focus on recruitment and agency development.

“We have the infrastructure to employ 60 advisers at present,” Kofkin adds. “But we want to expand with quality advisers who will be offered equity in the company after we see what they can offer.”

The key to obtaining equity is being able to share in the vision of growing the company, Kofkin adds. Advisers have to be prepared to embrace change.

The new investors brought with them skills to help create a proper management team and Kofkin was freed to return to his speciality — “dealing with clients”.

One of the investors was E. Looi who had been chief counsel at Unicol Oil in Malaysia. He was recruited as managing director.

“One of Looi’s criteria for investing in the company was that he would like to work for it — so we gave him the job of running the company,” Kofkin says.

After creating a proper management structure for the company, the next step was to apply for the unrestricted dealer’s licence. AustChoice helped with the application which was granted in March this year.

“We learnt a lot from the ASIC people when applying for our licence and that has been applied to the operation of the business,” he says.

Part of the past six months has been getting advisers used to the changes at Glenhurst, Kofkin says.

“We now have a formal management structure and this has lead to a different cultural background and thinking process,” he says.

It has meant the company has created its own corporate governance and compliance structure in-house, which is managed internally by Colin Peterson. Corporate governance has extended to the shareholders who are not allowed to have agency loans funded externally.

“It helped us create a team of independent shareholders,” Kofkin says.

As to the future, Kofkin admits the company is in the enthusiasm stage as Glenhurst continues to grow.

The aim is not to build the business to sell-out to a fund manager in a couple of years time, says Kofkin.

“Our aim is quality in what we do and that is passed onto the client,” he says. “We are not looking at numbers but building relationships both internally and externally.”

Kofkin points out that the chief executive officer of Glenhurst is a financial planner and that means the focus of the business is run on quality financial planning as the first goal.

Vital statistics: Glenhurst Corporation

Advisers: 17 proper authority holders, 17 estate planning advisers

Funds under administration: $100 million

Ownership: 10 individual private investors

Founded: 1991

Key figures: Anthony Kofkin (CEO), E. Looi (managing director), Paul Ryan (general manager — agency development), Colin Peterson (compliance and licencing) and Stuart Smith (chief financial controller)

Master trust: Austchoice

Research: In-house and Protax

Last conference: Lorne, 2000