Strength in numbers

Since its outset, financial services dealer Investor Group Limited has blazed its way along an acquisition trail in the name of distribution expansion and business efficiency. Nicole Szollos uncovers the driving force behind the group’s strategy.

With four acquisitions in the first four months of 2001, six in the 1999/2000 financial year and four acquisitions by its own members firms as well, Investor Group is a dealer with defined set of long-term goals.

"Acquisition was always our intention from the beginning, and the focus has always been regional," says Investor Group chief executive officer Tim Townsend who heads up the groups planning arm, Investor Financial Planning.

"We focused on acquiring 12 to 15 major regional firms and to a degree that original aim is almost completed."

Since floating in July 1997 as Investor Group Limited, the company's member firms now total 12 regional accounting practices with financial planning arms and two independent specialist financial planning businesses. The group also made its first foray off shore this year with the acquisition of a New Zealand based accountancy practice.

Also earlier this year Investor Group merged with the large accountancy firm PKF, and established its first city-based distribution channel. The deal, which brought in $40 million worth of fees to Investor Group, also provided distribution outlets in PKF's capital city offices in Sydney, Melbourne, Brisbane and Adelaide.

The PKF merger has also given Investor Group access to enhanced resources that can now be offered to the regional member firms including human resources services, IT and additional tax assistance.

With this acquisition focus and structure, Investor Group has often been referred to as a consolidator but in Townsend's mind, the description is not reflective of the group's functions and offerings.

"It wasn't a decision to become a consolidator. People call Investor Group a consolidator because they need to put us in a category, but we are a financial services group. Yes we do purchase distribution like other groups do, but we offer financial services," Townsend says.

Before becoming the publicly listed financial services firm known as Investor Group, the business started off life as an engineering & surveying company called WBCM Consultants.

Current Investor Group managing director and then WBCM managing director Kevin White was involved with transitioning the group from an engineering and surveying company, which was sold off, to a business with a changed name and new focus on financial services.

With its new name and direction, Investor Group began its pursuit of funds under management and bought the first two of its 12 regional accounting practices at the end of 1998.

Although there were a number of smaller regional acquisitions prior to the two, Townsend says the regional focus and identification of distribution became clear at these acquisitions.

Investor group then acquired one of its two specialist financial planning firms, Supermaster Corporation, in early 1999.

Gradual but constant growth has since taken the group to where it stands today with more than $2 billion of funds under advice and the development of its own wrap account.

Launched a couple of months ago WealthWrap is powered by back office administration services provided by BT, with Zurich's Dealer Back Office Services (DBOS) supplying a dealer support system. Townsend says the wrap is focused on a business efficiency model and 75 per cent of new business is expected to flow through it.

"WealthWrap is the key for us going forwards, and the cornerstone for our efficiency," he says.

Townsend says from the beginning, the aim of Investor Group has been to bring together greater distribution for the firm while building on its financial services. Ongoing development of business and a focus on operational efficiency are also core aims for the group.

As Investor Financial Planning (IFP) chief executive officer, Townsend is in charge of developing distribution for the different financial services channels of the group.

There are structured distribution lines for Investor Group, and the IFP division manufactures financial planning services for the regional firms and PKF financial planning arms, and distributes the solutions across these.

"There is a separate focus for financial services and Investor Financial Planning is a manufacturer of solutions. For example the Investor Group dealer's licence is under IFP, the wrap service was developed under IFP and the dealer back office service relationship with Zurich is also with IFP," Townsend says.

Another example of the group's efficiency focus is the Investor Financial Planning Dealer Platform, a process devised by the IFP division and developed by the IFP Taskforce. The Taskforce, consisting of key figures from each of the 12 regional offices, worked for two weeks in January this year to develop the platform which is now implemented across every office.

"The taskforce worked at flow charting the entire financial planning process, looking at all of the agendas," Townsend says.

After an initial round of feedback and comments from the regional groups, the dealer platform was then implemented into the offices last March. But Townsend says the feedback is ongoing and the platform is constantly being updated.

"It lives and breathes all the time," he says.

As part of his role Townsend also picks up changes to the platform that come out of group feedback, and assists with training in the offices. Townsend has just recently completed a second round of visits to the Investor Group regional member firms across the country, with the end result being 12 offices implementing the same financial planning platform.

"The challenge of this is to make sure that when they have a brilliant idea in say, Dubbo, we get it into Launceston within six weeks time," he says

The regularly updated financial planning platform has been an accepted process by the 12 offices, largely due to the allowance of input by each Investor Group member firm.

"It is corporatisation of the financial planning process, while also maintaining the independence of each firm," Townsend says.

Townsend is very aware of the need to keep the people who make the business in the process, and says Investor Group carries the philosophy that the business is the people.

The group also has a model that shares income growth across Investor Group as a whole, ensuring the smaller groups are not left out. A focus on what Townsend calls the second tier people is also important he says, for business to be self-sustaining in the future.

"It is about what motivates people to drive efficient business, and you need to motivate deep down into the organisation," he says.

Looking ahead, Townsend says further acquisitions this year are likely with a continued focus on distribution. As a 12 month target, from end of this financial year, for the WealthWrap wrap account, Townsend says he would conservatively expect between $300 to 500 million.

A focus on outsourcing will also continue, as Investor Group carries on with its aim of providing financial services to its member groups. The group will also continue integrating the businesses currently under its own banner.

"As margins become tighter there are more demands for corporate efficiency.

It's a game, making the move from advice to administration and transitioning boutiques into businesses."

Name: Investor Group Limited

Founded: Floated in July 1997

Ownership: 100 per cent owned by shareholders

No. of member firms: 16 accountancy and financial planning firms

No. of proper authority holders: 59

Funds Under Admin: $2 billion

Research: Lonsdale and internal

Wrap/Master Trust: WealthWrap

Key Figures: Kevin White managing director, Tim Townsend Investor Financial Planning chief executive, Terry Power chairman, Warren Howe business services chief executive