Inside the dealers: Building a bigger and better Bridges

In February this year, Chris Wren took on the role of chief executive of the Bridges group.

However, Wren has found his way to the top via a 15 year road with the group — first joining as a corporate development manager in 1989 and working his way through the ranks to general manager of the Bridges dealership in 1996, and deputy chief executive in 1999.

Wren stepped into the hot seat following the departure of former managing director David Bleakley, and hit the ground running.

“We’ve gone straight into change. I think it’s all very well to say you’re providing quality service through a planner to a client, but you can never rest on your laurels. And today there needs to be a lot of investment in what one does. We’re not trying to change Bridges to be a different beast that would break the quality style of the group, but we need to add value. If you do not have an attitude of adding value to the client, then you are simply in a commodity game, and we are not in that game,” Wren says.

The game that Bridges is in, however, is one combining financial planning and stockbroking capabilities in its dealer group.

“All our financial planners are stockbrokers, which is obviously a point of difference in the marketplace. You’ve got planners who want to get more involved in broking because of the demand for listed securities from direct clients, cost advantage to clients, and added value you can provide with investment initiatives using securities that you can’t do with managed funds,” Wren says.

The group also runs its own in-house master trust under the responsible entity Questor, which was established in 1992 and currently has $3.7 billion in funds under management.

Wren says that while the master trust has been part of its integrated business for many years, keeping this function internal also goes to the heart of its philosophy on service provision.

“Our belief was if we invested in this specialist capability within our business and the people and resources to do that, you could then control the standards and the quality of services, rather than just treat it as a commodity,” Wren says.

“What we do know is in some parts of the industry, they go and use a platform or master trust based on price alone, and find that satisfaction at client level to do with administration or the efficiency of the planner at branch level is not sufficient to add value to the business.”

And this philosophy of adding value is applied equally to the research and technical area.

Rather than simply buying research in as a package, Bridges has invested in a strong internal research and technical team — currently with 11 members — to look deeply at the most efficient planning strategies combining listed securities and managed funds.

This team also gets actively involved in discussions with fund managers about the creation of particular investments that will specifically meet the needs of their planners and clients.

The emphasis on adding value through investments operates in direct contrast to the school of financial planning thinking espousing ‘holistic’ or ‘lifestyle’ models, which Wren regards as dangerous territory.

“I think some areas of the financial planning community and in the market as a whole have moved that way because their capacity for adding value on investments has diminished, and if you can’t add value there, the client is going to start questioning the relationship.”

Going back to Bridges’ historical roots has also provided a signpost for expansion of the group.

In the early days, Wren says, the group was built through referral relationships with credit unions and other non-bank institutions, giving rise to the creation of financial planning practices to service those relationships.

Now the relationship services area of the business has been given a boost with the appointment of Paul Thomas in October last year to handle alliances, and in June, Tower Credit Union Alliance (TOCUA) was aligned with Bridges to further streamline and maximise these relationships.

“The focus there is on the different wealth management solutions we need in our relationship with non-bank institutions. Some of them are at a size where they have their own dealer’s licence, so we are putting in those a fully integrated business solution for the provision of quality financial planning advice,” Wren says.

This includes a combination of legal, research, marketing, technical, compliance, systems and financial planning solutions, which have been drawn from the Bridges dealership.

The creation of the Tower Wealth Management structure under chief executive Andrew Barnes has also strengthened Bridges’ position within the Tower group, according to Wren.

More co-operation and skill sharing with trustee arm Tower Trust has allowed the group to further enhance the solutions it offers to clients.

“That synergistic view of the creation of wealth management is how we can drive services out of our businesses and add value.”

Another area of considerable focus and investment for the group is in practice management, with the recent recruitment of additional practice managers in New South Wales, Queensland and Victoria.

Wren believes the maturity of the industry and its structure — in that it has relied in many cases on ‘one man bands’ in planning practices — has prompted an increased focus on practice management.

“Certainly within larger dealer groups, you’ve got a large, mature client base, you’ve got planners who are excellent but over time haven’t invested sufficiently in the growth of their business.

“So how does one go from helping financial planners be financial planners to now putting an emphasis on running a business as well? And do that in a balance so you don’t forget your business is still financial planning and clients, because clients drive the business, full stop. Your focus must be on that.”

And while one of the biggest challenges the industry has faced to date — the introduction of the Financial Service Reform Act — has seen planner fallout at some dealer groups, Bridges has not suffered this fate.

Wren believes the transition was made easier because of the group’s shared focus on stockbroking, which has made regular securities exams part of life for its planners, as well as existing high compliance standards, including full dollar and percentage disclosure, which has been in place since 1996.

“It’s about time everyone else caught up. I remember our planners saying to me back in 1996, you’ve brought this in, but we’re competing in a market where no one else is disclosing in the same way, aren’t we at a disadvantage? And I said sometimes you have to create a standard if you believe that is good for the quality of your business.”

Bridges is still actively expanding its adviser base, with a current growth rate of about 15 per cent, and focusing particularly on Queensland and Victoria as targets for recruitment.

Planners typically joining the group are already experienced, either with another dealer or running their own practice, and who are wanting to stretch themselves and provide additional services in the stockbroking area.

However, Wren says the challenge with significant growth in any dealer group is doing too much without adequate support and fragmenting the business as a result.

“As one invests in growth, you also have to invest in maintaining service quality and standards. I think we do have a very stable business, so we can absorb the servicing capacity that is needed for new planners, but not detract from the relationship we have with the existing businesses.”

So maybe bigger, better, stronger would be a more appropriate motto for the Bridges group as it moves forward.