Professional Investment Holdings’ (PIH’s) subsidiary business, Associated Advisory Practices (AAP), is growing not only in scale, but also in influence among the independent advisory force.
The business, established in 2006, has attracted more than 160 licensees as shareholders, bringing around 650 to 700 financial advisers to the table.
AAP takes a margin on volume rebates generated collectively by its members, and in return provides compliance, technical, human resources and marketing support — among other services. The remainder of the rebate is issued via dividends to shareholders proportionate to their investment contribution.
But the company’s involvement with boutique practices doesn’t end there. AAP general manager Soula Cargakis said the company was increasingly being seen as an avenue of expression for boutique licensees — representation some felt was lacking within existing lobby groups.
“I think they feel a little bit left out,” Cargakis said.
“I think they’re looking at us to be a bit of a voice for them.”
AAP’s annual conference allows members to discuss practice management matters as well as broader industry issues. The group recently established an adviser council consisting of six licensee representatives, two of whom now sit on the AAP board.
While AAP is giving its members a voice, its members also provide a top-down lobbying mechanism for the business.
“With all the proposed reforms, we thought that if we want to get a voice out there, that would be a good way: through the members themselves,” Cargakis said.
“We’re encouraging our members to lobby their local members and talk about what financial planning is about, and we’re encouraging them to give feedback to Treasury [about what the proposed Future of Financial Advice reforms] mean for their clients and their business.”
Cargakis said the group was dealing directly with politicians and Treasury officials rather than relying on traditional channels such as the Financial Planning Association or Association of Financial Advisers. That will continue through the adviser council, the inaugural meeting of which is expected to include Treasury officials.
A number of AAP’s board members are also PIH board members, including Robbie Bennetts, Grahame Evans and Stephen Murphy — and Cargakis is officially an employee of Professional Investment Services (PIS). AAP paid more than $1.1 million in management fees to PIS last year. The group made a profit of $1.4 million, and paid more than $1.3 million in dividends to shareholders.
AAP is keeping a keen eye on any potential ban of volume rebates, which could undermine its business model. In that scenario the company, like many independent dealer groups, has indicated it would seek to create its own in-house or white-label products.
