Growth slows as dealer groups go for quality

The only institutionally-owned survivors from last year’s list of Fastest Growing Dealer Groups, which gauged growth in adviser numbers over a four-year period, are AXA-ownedCharter Financial Planning, which increased its numbers by 57, putting it in third position for the year, andNational Australia Financial Planning, which increased its numbers by 39, earning itself a place on the table at position six. Interestingly, Charter’s stable mate — AXA Financial Planning — was missing from the top 10 list this year, after losing a net total of 11 advisers.

However, Andrew Waddell, general managerAXA Financial Advice Network, says that the numbers are in line with AXA’s expectations.

“If Charter is one of the fastest growing dealer groups, that’s great — but it’s not necessarily one of our objectives,” he says. “We probably don’t want to aggressively grow the network. We want to maintain the number of advisers we have working with us, but improve the quality of advice. We don’t believe it’s necessary to have the most number of advisers to run a successful dealer group.”

He says the slight dip in the number of advisers working under the AXA Financial Planning banner is probably part of a trend for advisers to use non-institutional brands. “But having said that, the AXA adviser base is twice the size of Charter’s, so it is relatively performing in line with expectations.”

The other point to make, he says, is that the principal practices operating under the dealer groups have more influence over the hiring and firing of individual advisers than the dealer group itself. “We don’t have an enormous amount to do with who comes and goes,” he says.

Making a first-time appearance on the list this year was bank-basedCommonwealth Financial Planningwhich added 94 advisers to its ranks, putting it into position one.

Commonwealth’s Brett Himbury says that advisers have been flocking to the group both from within the bank and from other institutional players, attracted by the bank environment which, he says, “has good customer relationships”.

Also making their debut from the institutionally-owned ranks areAon Financial Planning & Protection,Zurich-owned Financial Lifestyle Solutions,St George’sSecuritor/Pact,Guardian Financial Planning, owned by Promina andChallenger-ownedGarrisons.

Independently-owned Aurora Financial Services, launched in 2003 byMawson Securities, was one of only three independent groups on the overall list of fastest growing dealer groups. Aurora debuted on the overall list at position four and topped the list of independents after signing up 50 life advisers.

Listed groupDeakin Financial Servicesis also a newcomer to the overall top 10 list this year. Deakin tied for 10th position with independent Professional Investment Services (PIS), which slipped from first position last year after experiencing a net overall growth of only 25 advisers.

PIS chief executive Robbie Bennetts says that while the growth in numbers for PIS does appear small, in fact, in the year ending December 2003, the group issued 278 new proper authorities. However, the group also removed 195 proper authorities resulting in a net increase for the group of 83 financial advisers.

“Groups like ours traditionally had life advisers and accountants as proper authority holders,” he says. “A lot of those advisers left because they couldn’t satisfy the new educational requirements and didn’t want to. So as they have left, we have recruited fully-fledged financial advisers.”

The group did, however, make it to position number three on the list of independents and has, over the five year period 1999-2003, recruited in excess of 1,000 advisers — more than any other dealer group.

ING-ownedTandemsuffered the biggest loss in adviser numbers over the year, with 209 advisers leaving the group. However, Andrew Doquile, the group’s general manager, says this is all part ofING’sstrategy to position itself as a boutique dealer group.

“Tandem was built to be a premium advice brand,” he says. “For that to occur you need quality advisers.”

With that in mind, Doquile says Tandem intends to reduce the number of firms with the group from 40 to 30, while simultaneously lifting the number of advisers from around 70 to a maximum of 90.

Westpac Financial Planning and Advice also lost a significant number of advisers — 120 over the year. However, the group, as reported inMoney Managementon January 22, is in the middle of a strategic review designed to shake-up the way advisers operate with the group, and therefore declined to comment on the fall in numbers.