Risk advisers find Guardian under Promina

The creation of Guardian Financial Planning in October 2001 was the final piece in the financial services puzzle for parent group Promina.

But it wasn’t just an ordinary piece, according to Guardian general manager Ian Lewis, who described the move as a step in filling a “massive hole” in the distribution force ofRoyal & SunAllianceas it was known then.

Lewis says the group extensively researched all the opportunities available to launch a dealership and was keen to get into distribution following the Financial Services Reform (FSR) legislation.

Those pressures led to the birth of Guardian, which has a specific focus to convert life agents to advisers and maintain a relationship with them as they transition.

“We are now seeing an increasing number of financial planners being attracted to our model,” Lewis says, with the group so far attracting 100 advisers with plans to grow this to around 200 by the end of this year.

In its debut in theMoneyManagementTop 100 Dealer’s list, Guardian came in at 35, but with a push to 200 it would climb to within the top 20.

At present the group’s funds under administration is a small $50 million, with head office employing 12 people on sales and 20 in back-office support with a turnover this year expected to exceed $20 million in commission.

Lewis says the group has so far emphasised risk management and for that reason there is no house investment profile.

A few master trusts have been approved for investing with the only limitation that they avoid hedge funds.

“We appoint the master trusts once we are satisfied they are sound and reputable, but we do ask that hedge funds are not available as we are not comfortable with such a risk profile,” Lewis says.

So at what point does Guardian begin to differentiate itself?

Lewis argues that coming late to the party meant “we knew the advisers and had a clean sheet of paper. It also allowed us to create a partnership arrangement where advisers have equal say, not simply a group with distribution”.

Guardian, he adds, is a financial planning group that has deep roots in risk management and so has a good understanding of it.

Lewis also points to “an advanced IT platform in PlanTech’s ProPlanner, which has a lot more functionality as a platform for the management of advisers and our businesses than other widely used systems.”

Finally, Guardian has adopted “a meaningful buyer of last resort (BOLR) reward/profit share system that overcomes the obstacles of not being able to offer equity in the dealership”.

Under Guardian’s BOLR policy an adviser has to commit for a minimum of four years. He then has 12 months before he invokes BOLR.

In a complicated formula the adviser can come away with as much as 3.9 times the risk insurance business and 2.7 times the investment business.

“We want to reward people for the long term. This underpins our business but makes exit relatively easy if someone chooses to leave.”

Lewis has also arranged third-party loan finance secured against the BOLR for later this year that he says will drive business expansion and succession planning within the group.

He estimates there are 6,000 to 8,000 advisers who are in the pool that Guardian can tap, but to join Guardian, an adviser needs a minimum annual turnover of $200,000 and approval is also subject to assessment against Guardian’s financial model.

Advisers have the flexibility to operate their business as they wish but are required to work within Guardian’s compliance, education and training guidelines.

Lewis says Guardian’s preference is to expand through one and two person dealerships rather than buy a large group.

“It is cheaper to build in this way and large groups often drag along a tail of reluctant advisers who can create problems going forward.”

Guardian is particularly attractive to ex-life agents because it recognises their need for additional training to meet PS 146 requirements.

“Guardian recognises the aspiration of advisers from traditional life backgrounds to become better at being financial planners,” he says.

In making the move into the full range of financial services the group has created its own training organisation and makes use of a “business health” facility that looks at five key areas to assist the adviser in structuring and improving his business.

“We have set up a registered training organisation under the national training scheme to give advisers accreditation for PS 146 and offer the full diploma of financial services (financial planning). This helps advisers upskill into the new environment.”

He expects to offer a broad range of financial services, in particular a mortgage business and general insurance as well as a badged wrap product soon designed specifically for Guardian advisers.

With these structures in place Lewis is keen to dismiss talk that Promina is looking to sell its financial services division.

“Uncertainty around this stalled our start but has been removed now that the company is listing. We are now back on track to achieve our growth goals.”

As for the parental relationship he explains that “our board, management structure and set of accounts are separate. We thus have autonomy to operate the dealership according to our own goals and plans.”

The Guardian brand will be retained under Promina and the advantage of a big parent, Lewis argues, is the financial backing of a substantial institution — some millions of dollars and a badged master trust product.

Lewis insists that the parent “does not exclude us from offering other products. We actively encourage other products and have important strategic relationships with other product suppliers. Only by doing this will we ensure our longevity and livelihood.”

Still, the bulk of risk products are with Promina.

“This is simply a result of their good rankings in surveys. Other product suppliers get equal and fair access to our advisers.”

Vital Statistics

Guardian Financial Planning

Established:2001

Advisers:105

FUA:$50 million

Staff:20

Offices:NSW, Queensland, Victoria, Western Australia

Ownership:Promina

Remuneration:Negotiated fee

Key Figures:Ian Lewis (general manager),

Russ Weekley (national dealers operations manager)

Platforms:ProPlanner, Wealthpoint

Research:Internal and InvestorWeb

Next Conference:April, Venice