Tynan Mackenzie grows up

In 2004 financial services dealer groupTynan Mackenziewill reach double figures — the business will mark 10 years in operation.

Yet when Tynan Mackenzie’s chief executive officer, Tony Fenning, makes reference to the group’s milestone, it is mentioned only in passing.

It seems for Fenning, looking back on the group’s past is unnecessary — its future is already shaping up nicely.

Since its humble beginnings in 1994 as a joint partnership between former chartered accountants David Tynan and James Mackenzie, Tynan Mackenzie has evolved into more than a one-stop financial services outfit. It has metamorphosed into a business willing to push the boundaries of what is considered acceptable by its industry peers.

In the past three years Tynan Mackenzie has been highly focused. Not only has it bolstered its adviser numbers, settled a number of acquisitions and grown its funds under management to $1.2 billion, the group has also expanded its client offering and set in place a new paraplanning initiative.

But not all of these changes are new — Fenning says they have been in the pipeline since 1999. However, they have been broadly focused — involving expanding the business side from David Tynan and James Mackenzie’s original model and recognising the need for wholesale offerings, particularly wrap accounts.

“What we tried to do was change the business side from a ‘David and James’-size operation into a medium-size professional service operation,” Fenning says.

“We also used to mainly use retail funds, but in 2001 we set up a badged wrap account with BT, which we use as the centre of our servicing platform, as well as creating our own investment portfolio for our clients,” he says.

Fenning says the group’s move into the wrap account market was simply a matter of recognising an industry trend at an early stage.

He says the inclusion of a wrap account — which now holds $1 billion — was a “no brainer” for the group as it seemed an easier alternative for clients than having scattered retail funds, making it harder to keep track of the investments. The wrap account also allowed Tynan Mackenzie to incorporate ‘Tilts’ — an in-house term used to allow for different clients to have different emphases on other investments.

The wrap agreement between BT and Tynan Mackenzie seems a good fit for both groups, particularly as last yearBTrenewed its contract for a further five years.

After successfully altering the group’s business model and structure, Fenning says Tynan Mackenzie then began hunting around for the best advisers.

“There was a series of appointments that we headhunted for and those people have proven to be, in the main, extremely successful. We’ve also attracted advisers who have special skills in servicing our clients — we have advisers who are estate planning specialists, specialists in tax — and we have continued to broaden our services,” he says.

Tynan Mackenzie has built its adviser numbers to more than 30, with remuneration on both a salaried and commission basis, and about 80 staff in total around Australia.

The inclusion of new advisers meant the group also needed to expand its geographical footprint. So between 2001 and 2003 the group opened offices in Sydney, Wollongong and Melbourne. In 2002, the group also entered into an arrangement withAXA Australia, which became a one-third shareholder in the group. And in November last year, Tynan Mackenzie merged with a group in Adelaide called Sterrey Financial Planning.

Fenning says Tynan Mackenzie hasn’t finished blazing the acquisition trail. He says the group is keen to acquire further businesses and advisers in the future, however, he is all too aware of the difficulties and limitations of searching for prospective targets.

“Last year we announced we’re interested in merging businesses, and what we’re finding is that there aren’t a lot of businesses that are similar to ours. We’re also finding a general inertia in the market, but we’ve met with a lot of people who are showing an interest in arrangements with us and we’re really working through those,” Fenning says.

“We’re not interested in doing a large number of transactions, but we are interested in doing a small number of high quality ones that fit in with our business and culture. We’re really looking for people who might like to use the platform and system and process that we have, but who themselves are really good advisers,” he says.

Despite remaining tight-lipped on possible interested parties, Fenning will admit Tynan Mackenzie has talked to “a couple of hundred” groups. However, he says there is no timeframe to finalise acquisitions and expects only a handful will be a good fit.

Despite this ‘wait-and-see’ attitude, Tynan Mackenzie has maintained momentum with its business initiatives. While the group has been actively seeking acquisitions, Fenning and his management team have avoided resting on their laurels, focusing simultaneously on other projects. Some of these include establishing a paraplanner ‘precedent bank’ and completing the integration of the group’s Financial Services Reform (FSR) licence.

While many financial services groups may still be finalising their licence requirements or restructuring their business to prepare for the FSR to hit, Fenning says Tynan Mackenzie worked solidly on its requirements for an FSR licence over the past 12 months and has been able to spend the early part of 2004 bedding everything down.

And the group’s paraplanner ‘precedent bank’ initiative has also occupied part of this time. Currently the group only fosters paraplanners out of its Brisbane office. However, the new plan stems from Fenning’s former role as a lawyer. As with all law firms, partners used to have to draft up all the documents. However, if there are set models, or as Fenning calls it, ‘precedents’ in place for planners, it would increase productivity for advisers.

“These days, lawyers have very sophisticated databases and precedent libraries, so we think that’s one of the things that financial services firms need. So we’ve been working on that, but it’s still early days,” Fenning adds.