High-tech answer to age-old question

Advisers being swamped by more and more paper work may want to take a look at the systems used by the Hillross advisers to claw back more time in front of clients. Samantha Walker reports.

Advisers being swamped by more and more paper work may want to take a look at the systems used by the Hillross advisers to claw back more time in front of clients. Samantha Walker reports.

Hillross Financial Services managing director Jonathan Harrison thinks financial planners are under siege.

"The last decade has been dominated by financial planners being crushed by their own success," he says.

He believes the main culprit is the volume of a planner's back office. One of the loudest gripes many financial planners have is the unwieldy bulk of paper work which comes with a successful practice. But there's more to have planners on the back foot - today's market relies on economies of scale.

"The emergence of the Internet and the long term bull market has encouraged a lot more people to deal with their finances directly. In response to this, financial advisers are having to reduce their operational costs. In the early to mid 1980s, advisers could expect to charge fees of 8 per cent up-front. Now it's about 4.5 per cent, with advisers taking 1.5 to 2 per cent of this.

"Sales revenue has been cut and advisers now have to produce four times their productivity or see their share of the market fall."

Lucky for Hillross Financial Services’ advisers then, he says, that their dealer group offers a "huge technology-driven leverage" with which to combat this two-pronged issue.

The Hillross Business System allows the group's 190 planners to conduct their business almost en-tirely online. In fact, Harrison insists “you can’t join Hillross if you’re not electronically con-nected”.

One of the key planks of the Hillross Business System is consolidated reporting. Advisers have ac-cess to consolidated reporting for clients through its PortfolioCare master trust facility, and will soon have access to consolidated reporting for retail products through InvestmentLink. Real time details of a client’s retail investments in Hillross’ parent group, AMP (not a part of the Investmen-tLink initiative) will also soon be available via AMP’s database, AMP Client/Product Data. By the third quarter of this year, Harrison says his group will have “completed a journey we’ve been on since early 1998”, to provide the best technology available in the industry to its advisers.

“We do believe we are the leading dealer group in this respect,” he says.

Hillross Business Systems also includes the provision of research data which is delivered to an ad-viser’s desktop electronically. Hillross advisers have access to adviserNET support and receive the Hillross Financial Times newsletter via e-mail.

Another crucial part of Hillross Business Systems is the Practice Management Guide which Harrison describes as “a cookbook or A to Z on how to run a financial planning practice”. The Practice Management Guide gives planners tips on areas such as public relations, targeting par-ticuluar markets, succession planning and a range of other non-technical, compliance topics. Plan-ners also have access to IntegraTec’s monthly videos and workbooks as well as the IntegraText work guides.

In an effort to further boost the technological savvy of the group, Hillross advisers are also able create their own Web site through template facilities available on adviserNET.

Harrison believes that Hillross’ technical efficiencies help streamline an adviser’s business so that an adviser can concentrate on his or her core skill — providing the best advice to clients.

“The ideal practice should be three planners and one support staff, not three planners and six people supporting the planners,” he says.

In fact, the technical support provided to Hillross planners not only serves to relieve a practice’s back office burden, but to allow the planner to run their own business as they see fit.

“Many dealer groups can be divided into two categories — those with salaried advisers and those who leave the adviser to run their own business. We’re in the run your own business category.”

In keeping with this spirit, an adviser who decides to leave Hillross is free to take their clients with them.

“Two or three years ago, it struck me that the way to keep advisers is to let them leave. You’ll find they don’t shake the bars if there aren’t any bars,” Harrison says.

Hillross advisers can also choose to brand their business either through Hillross or through co-branding with their own business name. And while having a strong parent like the AMP group benefits any business, Harrison says he hopes to keep Hillross as an objective dealer group. Unlike some other dealer groups, he says, there is no difference between the commissions offered on AMP stable products and external products, nor will there ever be.

“We can’t claim to be impartial because the Corporations Law forbids it, but we can aim to be ob-jective.”

This philosophy makes good business sense, Harrison says. “It’s a lot more sensible to give clients choice.”

Research is provided through “independent sources” such as Assirt, van Eyk, Morningstar, Life Re-search and Property Investment Research (PIR). The group also uses broking groups Hartley Poynton, JB Were, Macquarie, Ord Minnett and Salomon Smith Barney for shares research and trading.

In recognition of the popularity of agribusiness investments among advisers, Hillross was one of the groups behind establishing a research service on these investments. Van Eyk Capital has inves-tigated about 40 agribusiness schemes, with four making it onto their own recommended list.

In order to make it onto Hillross’ recommended list, a product has to be judged to be investment grade by two out of three research sources.

Hillross advisers are ranked on a three tier basis — principal advisers, associate advisers and life and risk insurance specialists. Principal advisers are required to hold four DFP subjects, including DFP 1 and 2. Associate advisers are required to have passed DFP 1 and 2 (Harrison says the requirement to hold DFP 2 is currently under review). Life and risk insurance specialists, not required to hold a proper authority, must have completed DFP 2.

Advisers belonging to Hillross pay a yearly membership fee (in 2000 it is $510 for Financial Plan-ning Association members, or $560 without FPA membership), plus a sliding dollar cut of between five and 25 per cent. Hillross advisers are also expected to contribute to the costs of software and research used by their practice.

Hillross offers its advisers a cut of PortfolioCare’s management fees depending on the amount of business written. This mirrors recent trends in the industry for planners to set up their own master trusts or to receive equity stakes in their own dealer group.

“In our case we have a revenue sharing arrangement under which a practice becomes entitled to a share of PortfolioCare management fees for the assets they have under advice within it. The per-centage share of management fees also scales up as the volume of assets increases,” Harrison says.

Vital statistics:

Name: Hillross Financial Services

No. of advisers: 190

Funds under administration: $4 billion

Ownership: part of AMP Group of companies

Founded: 1987

Projected revenue for calender year 2000: $30 million

Key figures: Jonathan Harrison, managing director; Anne Fitzgerald, national network manager and deputy managing director; John Pascoe, portfolio service manager; Geoff Thompson, financial planning and technical manager; Jeff Allen, operations manager

Research: van Eyk, Morningstar, Assirt (investments); Life Research (risk); van Eyk Capital (agri-business); PIR (property syndicates); Hartley Poynton, JB Were, Macquarie, Ord Minnett, SSB (shares).

Master trust: PortfolioCare

Last conference: Bowral

Offshore conference: Botswana, July 2000