Sequoia’s Crole expectant of higher income from new advisers

Sequoia’s chief executive Garry Crole said the expected income among advisers who joined the firm in FY24 is three times that of advisers who departed from the licensee. 

Earlier this week, the firm announced its FY24 results, reporting a statutory net profit after tax of $24 million, boosted by the sale of Morrison Securities.

Revenue in its licensee and adviser services division rose 27 per cent to sit at $113 million, and it recruited 70 advisers during the period with 56 departing, who Sequoia described as “smaller non-economic advisers”. 

Licensee and adviser services made up 91 per cent of total group revenue.

“All of this growth was organic as adviser income supported by the move from commissions to annual fees, the increase of clients per adviser, and the need for advice increasing from the IFA space as the adviser pool shrunk and the availability of receiving advice from a bank or product provider continued to close,” it wrote in the results.

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Elaborating on this in a shareholder call, Crole said: “The advisers who we have been bringing into the business are higher income generators than the advisers we were losing. The 70 advisers that have joined, we expect their income for the 12 months to be $18 million. The 56 advisers that have retired, or merged or left the industry, was about $6 million. 

“So the net growth in prospect of organic growth over the 12 months was very positive so we are seeing double-digit revenue growth from recruiting and that’s extremely positive.”

He also touched on the shareholder dispute which affected the second-half of the financial year. A group of shareholders attempted to push Crole and director Kevin Pattison from the board and replace them with Peter Brook and Brent Jones. Jones has been the firm’s head of professional services since December 2017 and Brook was the former chair of licensee Diverger.

The disruption impacted operating momentum, caused unrest among employees and advisers, and resulted in additional costs to maintain businesses and staff throughout the period, it said.

A simultaneous motion saw Sequoia contact the Takeovers Panel as it believed the shareholders had been misleading over how many shares they held in the business. The panel later ruled in Sequoia’s favour.

An extraordinary general meeting was held on 5 June, but the shareholders were unsuccessful in their bid, although changes have since been made such as the streamlining of its existing divisional structure from four to two, and an agreement that Crole will step back from the leadership role by FY27. 

Crole said: “One of the positive outcomes is it has potentially sped up the process of streamlining the business and I think it did encourage us to accelerate that, even though the board had already set that in place, and hopefully us taking that action now gives shareholders comfort that we listened to their concerns. 

“The unsettlement that we saw among staff and advisers has really calmed down and we are seeing inbound inquiries in respect of people wanting to join rather than having to put out fires and the recruiters who were targeting our staff have also slowed. That part of 2024 is beyond us and, in some ways, it’s been a positive shake-up and allowed us to move forward with new passion and excitement.”