Mullens helps keep Madison on the move

Two years ago,Madison Financial Groupwas heading towards a phase of tumultuous change.

The group, made up of a small number of member firms, started to divest itself of some of its advisers, a move that allowed the business to re-focus on future developments in the self-managed superannuation industry.

The changes in adviser numbers would also lead to the creation of new business ties and the development of a growth strategy that Madison would strenuously push forward.

Today, Madison Financial Group stands leaner in structure. The planner eradication is behind it and with a small bank of 20 advisers situated across Australia’s capital cities, the group is not shy about being on the member firm recruitment trail and ready to begin its next phase.

Madison Financial Group director Peter Mullens says the recruitment stage is at two levels — existing member firms looking to add businesses under their own banner and at Madison’s executive level where planners will be selected.

Mullens says the majority of the firms that the group has signed on in the past have largely been life agencies where the principals have wanted to retire leaving behind practices with small teams of staff. This sort of business is very attractive to Madison, according to Mullens.

“We certainly aren’t looking at having 100 property holders,” he says.

“We would like to increase member firms to five or six and then the growth can go on within the member firms,” he says.

Madison’s current structure is broken up into an adopted member firm concept. This structure is then broken down further into the individual shareholders and member firms.

As well as financial planning, Madison still operates a life broking business. However, in the past few years the group has broadened its reach, targeting the self-managed superannuation funds (SMSF) and administration market — an area that has caught the eye of the group’s high-end client demographic.

Mullens says the SMSF focus is one thing which differentiates the group from other Australian financial planning firms.

However, the fact that Madison is classed as a boutique but doesn’t operate as one is, he says, the group’s key point of difference.

“It’s a boutique in size. We have 15 to 20 advisers, but we’re not boutique in how we’re operated,” he says.

He says the group’s focus on the SMSF market is one example of not operating like a boutique, particularly when the group has more than $600 million in funds under administration. Also, Mullens says the group’s current growth strategy to increase member firms and adviser numbers is not typical of the mindset of groups who, in the main, want to remain small.

To attract new member firms, and in turn increase planner numbers, Mullens says the group is offering equity in the business. At present, Madison is in the hands of about nine of its 20 advisers.

Eight members of Madison’s senior staff have ownership, with the majority of equity held between Mullens, Phil Robertson (member firm owner of Genesis Financial Partners), Madison managing director Barry Gubbins and three other shareholders.

Mullens believes Madison will be an attractive home for those advisers who do not enjoy being part of a large dealer group.

“Many of the people who were financial planners that were part of larger groups, in many cases found a whole lot of dealer groups wouldn’t, for example, use property syndicates — not to say they [these products] are fantastic — but there was little choice… if someone wants more and is squashed into a box, it makes it difficult,” Mullens says.

Madison has been operating in the Australian market since 1983. Founded by a formerMonitor Moneyplanner and anAMPlife agent who decided to come out of the property trust environment, the group’s initial focus in the financial planning arena was in life broking.

While Mullens is not technically a founding member of Madison, he did join the group shortly after the group’s founding members decided to expand the business into financial planning.

“I had known them for a number of years before [joining Madison],” Mullens says. “The group was always going to be a financial planning firm.”

The original founders sold the business to its advisers in 1986. The group self-managed its business operations until about 18 months ago when Barry Gubbins was appointed managing director. It was an interesting appointment — Gubbins has a background in IT.

“Up until two years ago, we were responsible for managing the administration side of the business,” Mullens explains.

“The aim [of Gubbins’ appointment] was that we wanted to go forward, and bring in management expertise so we could focus on the clients,” he says.

The changing of the administrative guard from Mullens and his fellow senior advisers to Gubbins has not only led to the group focusing on productivity, it has also allowed it to re-evaluate its other business areas.

Madison had been running its portfolio administration as a wrap and the group had become aware of its limitations. With Gubbins on board to look after the day-to-day management of the business, Madison was able to look to other alternatives to help them with their back-office.

“We spoke toIOOFand Oasis, and in theory we should have been a fit withMacquarie’s wrap, but in the end it came down toBT.”

With the administration side of the business mapped out, Madison then turned its focus on finding a good fit for its research provider.

The group had been using a variety of research resources from different places — firstvan Eyk Research, thenMorningstar. However, after being dissatisfied with the value for money aspect, in September last year Madison signed onLonsecas its primary supplier of research.

The choice seems to be a perfect fit for the group, and a clear indication that the changes Madison has made in the past two years has proved that the group is well past its phase of disruptive change.

Vital Statistics

Name:Madison Financial Group

No. of advisers:20

Funds under administration:$600 million in total, of which about $200 million is in the wrap

Ownership:Adviser owned

Founded:1983

Location:Head office in Sydney and offices in Maitland, Gold Coast, Canberra, Noosa and Central Coast

Key personnel:Managing director, Barry Gubbins; director, Peter Mullens

Position in Top 100:84

Research:Lonsec

Master trust/wrap service:BT Wrap