Grown-up plans for small dealers

You would expect big dealer groups to dominate any list of the fastest growing businesses in financial planning where the results — like ours — are based on growth in adviser numbers. After all, a boost in the ranks of just 5 per cent would equate to a gain of at least 50 advisers for the likes of AMP, Professional Investment Services (PIS), and Count Financial.

And although six of the top 10 in Money Management’s list of the fastest growing dealer groups were indeed owned by institutions, there were still four smaller, privately-owned groups which were able to experience the phenomenal growth required — in many cases upwards of 100 per cent — to beat the big boys and push into this year’s list.

Take Community and Corporate Financial Services (ComCorp) — a small planning outfit based in Queensland that got its start advising miners. The fifth fastest grower according to the Money Management list, ComCorp provides financial advice to members of credit unions, and is run by Mick Dunne, who is a member of the Order of Australia.

The list of fastest growing dealer groups was based on data from Money Management’s Top 100 dealer group survey, which was last published in June 2004.

The second fastest growing dealer group is another boutique, Total Financial Solutions, which experienced a 151 per cent rise in numbers.

Managing director Michael Scott attributes much of the growth to the adviser-owned group’s national expansion plans. He also believes advisers are attracted to the opportunity of getting equity ownership and the control that it brings.

So too does Financial Services Partners (FSP) managing director Geoff Rimmer, whose non-aligned Melbourne-based group came in at number nine.

“These guys know that all the business decisions which need to be made are decisions that are necessary for the group as a whole, rather than just looking after a shareholder who’s a pure product supplier. What that has done is protect the integrity of our approved product lists. We do have our own wrap and master funds, but we also use six other wrap and master funds which preserves the integrity of this issue of choice.”

He also pins FSP’s growth on the group’s Prestige Partner program.

“We know that if an adviser can work with us we can give them a minimum increase of their income every two years of 50 per cent.”

The fourth boutique to make the list, Integrity Financial Planners, grew because it picked up a lot of risk advisers.

Up until Financial Services Reform (FSR) came into force in March last year, ‘lifies’ were not officially considered to be authorised representatives. But as a requirement of the new regime, they had to be re-labeled as financial planners, and hence had to join a wealth management-based dealership.

Suddenly, groups that already had many risk advisers, like Integrity and this year’s fastest growing dealer group, Millennium 3, experienced a rapid growth in numbers.

Nevertheless, Integrity managing director Phillip Coldwell says there were several other reasons for the group’s growth.

“There have been a number of people appointed as authorised representatives who were in paraplanning roles and they have progressed.

“But there has also been a large number of people in the last two years who have come to us — generally who are sick of the large groups; the lack of service, the excessive regulation,” Coldwell says.

Of the six institutional dealer groups that made the top 10 list — Millennium 3 (owned by ING), Financial Lifestyle Solutions (owned by Zurich), Pivotal (owned by Tower), Associated Planners Financial Services and Garrisons (owned by Challenger) and Guardian (owned by Promina) — four have a strong risk insurance background. This includes Financial Lifestyle Solutions, Pivotal, Guardian and Millennium 3.

Millennium 3 managing director Ken Hanlon places the group’s 300 per cent growth in adviser numbers squarely on the risk licensing issue.

Before the introduction of FSR, most of the group’s advisers worked for a seperate risk-based company called Millennium 3 Professional Services.

“[After FSR] we simply rolled them all together under the new Millennium 3 Financial Services licence,” Hanlon says.

Guardian managing director Paul Forbes says having an in-house risk training office was integral in the Promina-owned group picking up a host of new risk advisers.

“In 2004 we marketed specifically to risk planners who needed help getting through FSR,” he says.

Financial Lifestyle Solutions general manager Cameron Walsh says life insurers were part of the reason why his group picked up in numbers, but not the only one.

“Quite frankly, we had a lot of advisers who joined us prior to FSR. There were a few that joined us for licensing reasons, but really we had a fairly large majority of the Zurich advisers who were already with us.

“We’re a little bit different from other dealers in the marketplace. We’re one of the few which can actually provide advice in relation to life risk investment, superannuation and general insurance. Being able to provide our clients with a broad range of product is a huge advantage. We’ve got really strong relationships with the same people and it’s cost effective. And that’s allowed us to grow quite rapidly because of the really good referrals we get from advisers.”

The two remaining groups to make the list of fastest growers were Challenger-owned APFS and Garrisons.

APFS was acquired late last year by Challenger, which already owned Garrrisons. The two groups will operate under a combined dealer licence from March this year when they officially become Genesys.