Rhombus Advisory steps out from the shadows of Insignia
Rhombus Advisory CEO Darren Whereat has detailed how the firm is supporting the growth aspirations of its advice network, following its institutional exit.
In July last year, Insignia first announced its intention to reset its financial advice operating model by launching a separate partnership model focused on self-employed advisers.
Now called Rhombus Advisory and led by Whereat, Insignia’s former chief advice officer, the firm successfully separated from its institutional owner on 1 July 2024.
The change saw self-employed advisers at RI Advice and Consultum, equating to approximately 480 advisers in total, move to Rhombus’ AFSL – making it the fifth largest licensee behind WT Financial Group, Centrepoint Alliance, Count and AMP Group on top.
Three months after the exit from Insignia, Whereat spoke with Money Management regarding the transitional period and its growth plans on the horizon.
“We could not be happier with how we managed to separate away from Insignia. Insignia were wonderful throughout the process, making sure that we had the right resources. Clearly, we planned this over a long period of time – in excess of a year,” he remarked.
“Our core business remains the same, in that we run two AFSLs that support self-employed advisers to grow their business and to give advice.”
Approximately 60 internal staff moved across to Rhombus during the transition, while its 480 advisers are spread across 220 advice firms, which are all at the smaller end of the scale. These businesses range from practices with more than 10 advisers to some with less than five advisers, as well as single operators.
According to Adviser Ratings, typical advice firms are sized between one and 10 advisers, with this segment accounting for over one-quarter of the entire profession. Practices with 11–100 advisers make up 21 per cent, followed by businesses with 100 or more advisers at 20 per cent.
Whereat explained: “We go across the whole spectrum and the commonality between all of them is they are self-employed businesses. We don’t get involved in the way that they run their business with respect to their individual employees, but we partner with them.”
The path to independence
Rhombus’ split from its institutional ties echoes another major deal set to shake up the advice industry. Last month, AMP announced it would be selling its advice licensees and self-licensed offering Jigsaw for $10.2 million, and AZ NGA would acquire minority stakes held by AMP in 16 practices for $82.2 million.
Reflecting on these major changes in the advice space, Whereat said: “What we’re seeing now is a genuine profession where businesses are standing on their own two feet. I think what you’ll end up with is a far greater respect, if you like, from the consumers of advice, to say that this business is just advice.
“We got the opportunity to separate ourselves from a product manufacturer, if you like, to really make sure advice stands alone as our business – that is the only business that we’re in.”
This “professional services-style model” of pure advice businesses is where the profession has been heading over recent years, the CEO added, after a long period where banks dominated the industry.
Money Management previously spoke with Godfrey Pembroke chief executive Mark Fisher on its own path to becoming an adviser-owned, adviser-run licensee after it split from Insignia this year.
“If you look back at Godfrey Pembroke’s history, it always had a desire to stand on its own as an advice business. That desire never really went away,” Fisher said in July. “This is genuinely adviser-owned, adviser-run.”
Controlled expansion ahead
While licensing is the primary service that Rhombus offers to its advisers, the firm is also seeking to support growth plans – be it organic or inorganic – of its advice network.
“Our model today has evolved from just the licensee. We like to think that we’re more of a business partner. What I mean by that is we consult with the business around their growth aspirations and whether it’s inorganic through M&A or organic,” the CEO said.
For those looking to pursue inorganic growth strategies, Rhombus helps facilitate the process of finding a merger partner for them within its own network or outside of that in the wider industry.
“At the heart of what we do is we’re a licensee business operating in the financial advice space, but we’d like to think that we bring more than that. Ultimately, we support their M&A and succession aspirations, either from within the network or by supporting them through their endeavours out into the broader community.”
Rhombus has facilitated nearly 80 transactions over the past two years when it was still under Insignia, Whereat noted, through a combination of practices purchasing client books inside its network and others acquiring businesses outside of the network.
While the firm is looking to expand the number of advisers it serves, the chief executive said this will be achieved through “controlled expansion” of its existing practices, rather than actively pursuing new firms to add into its AFSL.
He said: “Would we be looking to grow authorised representative numbers? Yes, but the way we will do that is by investing in the businesses that we have, putting in place great technology, looking at process improvement, and creating capacity within their business.
“We know if we do that, then they will be more confident to acquire, and by extension, if their business is getting bigger, so is ours. So we’re bringing controlled expansion into the network through the businesses that we’ve got, by supporting them with their M&A, rather than recruiting firms into Rhombus.
“We’re very happy with the network that we’ve got and our first priority is to support their growth aspirations.”
Similarly over at AZ NGA, the firm is looking to assist the 16 minority stake practices it is acquiring from AMP in achieving their growth ambition through additional scale.
Speaking at the time, AMP chief executive Alexis George told Money Management it had divested its stake in the advice firms to AZ NGA as it was unable to facilitate the growth the firms were seeking.
“We felt we weren’t the right owner for those businesses. It’s a good time for advice so some of those businesses are looking to grow and need capital for that, so we wanted to find a big player who could really put ample capital behind them for growth and succession opportunities,” she said.
Other licensees are also seeking to grow the practices within their respective networks rather than big M&A deals.
Centrepoint Alliance is hoping to benefit from the impact of M&A activity by other licensees without needing to enact its own, while WT Financial is looking internally at its existing practices for growth.
“We want to help them with corporatisation initiatives, we will be playing a key role in helping facilitate M&A and succession planning among our practices. We really see a push towards this corporatisation over the next five to 10 years, and we are very excited about playing a leading role in that,” WT Financial managing director, Keith Cullen, said.
AUTHOR
Jasmine Siljic
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