Grosvenor Securities takes the next step

The evolution of a dealer group can range from a collection of like minds to an organisation changing to meet new opportunities and regulatory demands.

Grosvenor Securitiesis no different.

It started in 1989 with two planners, Dennis Munari and Brian Lewis, creating a practice management business.

The two ran their own financial planning businesses under the Grosvenor licence.

This arrangement continued until 1994 when both practices merged with the creation of a dealer group.

“We started offering fee-based dealer services under the Grosvenor badge,” Munari says.

“The target was predominately experienced planners with established client bases and revenues.”

Both partners of Grosvenor continued to service their own clients, but demand for the back-office service offered by the company meant Munari and Lewis started to concentrate on compliance and management of the dealer group.

The services being offered included compliance training, supervision and administration of adviser remuneration.

Munari says it was the first dealer in Australia to offer fee for service in the financial planning industry and were very competitive on pricing.

The associated planning firms continued to operate under their own ownership, with the Grosvenor name used as a dual-badging practice, although this has now ceased.

“We were unique in that we rebated 100 per cent of commissions and trails,” Munari says.

“It is very much a user-pays service and we negotiated outsourced services for these planning firms.”

In 2000, Grosvenor decided to re-invent itself.

The company employed a full-time compliance officer, Brian Keenan, who was recruited fromASIC, as well as using external compliance consultantsAccent Consulting.

Grosvenor undertakes two audits a year of the firms using its licence.

“Our audits are a total review of the financial planner’s business, as well as an educational process to make the planner understand their responsibilities and obligations,” Munari says.

All advisers in Grosvenor subscribe toIntegratectraining and there are two formal professional development days throughout the year. The company has an annual conference.

“The advisers are encouraged to attend technical days put on by fund managers and research houses,” Munari says.

Since 1994, Grosvenor has added planning firms to the list of users and the company operates as a more integrated dealer group rather than just a service provider.

When new planning firms want to join Grosvenor, the company undertakes a due diligence and compliance check.

“We aim to attract experienced planners who have been licensed for a minimum of five years and are seeking integrated dealer support services,” Munari says.

He admits the conditions for seeking new planners to join Grosvenor are fiercer today than when it began expanding nearly 10 years ago.

“Today the marketplace has shifted and dealerships have become a commodity,” he says.

“As a result, we offer a turn-key dealer service for firms that want to join us.”

Grosvenor still does not employ salaried advisers in its Melbourne-based head office operation and clients are referred to advisers in the group.

As Grosvenor focuses on becoming a more integrated dealer group, rather than a collection of individual firms, changes are planned in the operating structure of the dealership.

“We are focusing on greater integration with our partners, together with systems and services to add more control and efficiencies to the dealership,” Munari says.

“This includes integration of IT systems and administration platforms within the group.”

The majority of advisers in Grosvenor have common IT software, but some have been using alternative systems that are not always beneficial to the efficiency of the dealership, he says.

Munari admits that using a common platform and a unified system will achieve efficiencies in the operation of the back-office and scale.

“However, it is important there is transparency in the services we provide to planners,” he says.

There are 51 planners currently using Grosvenor and, as part of the move to create a dealership structure for the company, the two partners have offered equity to existing financial planners in the group.

“We have offered 25 per cent equity to existing and new financial planners joining us,” Munari says. The two partners own the remaining shares.

“We have established a board of management for the group and a shareholder financial planner committee,” he says.

“We are currently reviewing some of the old structures of Grosvenor and are encouraged by the support of the new advisory committees.”

Munari says there are several issues facing the group to enable its transition into a fully integrated dealer operation.

“The first is consolidating our financial planning IT systems, which will bring greater efficiencies,” he says.

“It will also bring better business practice management and enhance our compliance systems.”

The next is to strengthen the relationship between the advisers and the dealer, Munari says.

“In order to maximise the value of the group, we have to have centralised management systems in place and a more integrated relationship with our partners,” he says.

“This will also lead into a more controlled administration system for the group and put head office in constant touch with what is going on in our advisers’ businesses.”

The client base of Grosvenor is middle-class Australia. This client base reflects the structure of Grosvenor’s participating firms, which includes accountants with financial planning operations.

The future for Grosvenor is controlled expansion, with the aim of creating a dealer group with between 75 to 100 planners in the next three years.

“We are also going to continue with the alignment of the adviser/equity situation,” he says.

“We want to remain independent, as we believe that will give us a commercial advantage in the marketplace.”

Munari says, however, a joint venture with a like-minded organisation has not been ruled out.

“Our objectives have been to focus on integrating the group and now we must concentrate on brand awareness,” he says.

“I would like to see all firms operating under the single Grosvenor brand in the future and create an independent boutique dealer group.”

Vital Statistics: Grosvenor Securities

Established:1989

FUA:About $1 billion

Staff:6

Planners:51

Ownership:Advisers, directors and staff

Key Figures:Dennis Munari, Brian Lewis and Bruce Keenan

Platforms:Avanteos, Asgard and Beacon

Research:Assirt, InvestorWeb and AdvisorEdge