Guardian Advice unveils new succession plan

Guardian Advice has overhauled its succession planning strategies with a focus on bringing new financial advisers into the business.

Guardian said it will aim to proactively identify an appropriate succession strategy for practices using a three-pronged strategy.

This will consist of a standardised succession and purchasing execution process, including legal documentation; providing better access to finance for financial advisers to use through parent company Suncorp and other accredited banks when acquiring new client registers or buying equity in an existing practice; and an equity partnership model to support the goals and succession plans of larger practices.

The offer is part of Guardian's value proposition to financial advisers, according to Guardian Advice executive manager Simon Harris. Guardian continues to aim to increase from around 150 to 200 financial advisers over the next three years and is currently in discussions with around 40 to 50 practices, Harris said.

The new strategy was developed from March this year when former Commonwealth Bank national head of financial planning, Ian Anderson, joined the group as business acquisition manager.

Harris said the changes were based on financial adviser feedback and although Future of Financial Advice (FOFA) reforms had caused some uncertainty around practice valuations there are still plenty of buyers waiting in the wings until there is some more certainty.

The changes will make it easier for younger financial advisers to buy into a practice when an older adviser is looking to get out, and will also allow for a more orderly transition, Harris said. 

There has also been no change to the group's buyer of last resort policy (BOLR) since the 2007 decision to move from a BOLR arrangement to a practice buyout facility (PBF) based on current market valuations, according to Harris.

Those practices with a grandfathered BOLR policy will retain that, with those that are in place usually done on a recurring revenue valuation basis, although the exact number varied from practice to practice, Harris said.

Harris described two BOLR transactions that had taken place recently. In one Guardian had acquired 100 per cent of the practice then sold that back to another financial adviser that adviser to join the group and take over those clients.

In the other Guardian entered into a four year servicing agreement with an existing practice on a "try before you buy" basis, allowing that adviser to purchase the practice any time in the next four years at the agreed price - with the potential to improve the value of the practice over that time.