In many large organisations, financial planners have become merely a number, with no say in the direction of the business. And while many boutique dealer groups claim to offer planners a say in the way the business is run, often it is a token voice.
Melbourne-based Financial Partnership set out to ensure that its advisers had genuine input into the operation of the dealer group.
In July 2002, when Financial Partnership got off the ground, there was a need to offer a different style of dealer group, particularly in the mid-sized boutique space, according to managing director Stuart Abley.
“Also, a lot of advisers had been promised a lot and been delivered very little,” Abley says, adding that there was a need to accommodate the more business-focused planner.
While IOOF owns 25 per cent of the group, 50 per cent is owned by advisers and the remaining 25 per cent is owned by staff — and the equity participation is attractive to advisers wanting to join the dealer group.
“If we are building a group of substance and value, equity will mean something to the adviser,” he says.
“If we can build a strong brand, it will be a known opportunity in the [financial planning] industry.”
And there’s no doubt Financial Partnership is attempting to give advisers the opportunity to influence the direction of the group. Elected advisers sit on a panel that debates issues and ideas before putting them to the dealership’s board.
“Advisers can say how they work within the group. It is an opportunity for them to provide a direct input into the running of the dealership,” Abley says.
“As our name says, it is a partnership between the adviser and the dealer group.”
Financial Partnership executive director Joe Botte says the dealership tries to get a cross-section of views on a variety of issues.
“It is an important component of the value proposition we put to advisers,” he says.
The group takes the same approach with its investment committee — with representatives from the adviser group sitting on the committee, ensuring the approved products list is “dynamic”, according to Botte.
“Because it is adviser-focused, we get a lot of good options and this is fed into the approved list,” he says.
With hands-on practitioners on the committee the approved list is better focused to meet client expectations, Botte says.
“The advisers are at the coalface, which means we are producing something that’s more than just a list of products,” he says.
“We are disciplined in our research and due diligence is done on each product before it goes on the list.”
Research is sourced though IOOF’s Australian Financial Group’s internal research department.
However, the dealer group also uses van Eyk, PIR and Lonsec for additional research.
“The research is passed back to the committee to make a decision,” Botte says. “But it does depend on what we are researching. For example, if it is a property syndicate that is time sensitive, the committee doesn’t have to meet many times to make a decision.”
To be able to maintain this levels of consultation and responsiveness, the group has capped its size at 60 planning practices nationally.
“The original thinking was it would take until June 2005 to achieve that,” Abley says. “But today we have 40 practices with 51 authorised representatives.”
The breakdown is 26 in Victoria, 19 in New South Wales, four in Queensland and two in Western Australia.
When the group achieves the threshold of 60 practices, it will only take on new advisers when somebody else leaves. And to join the group, an adviser must have achieved a high degree of success in their own right.
“The benchmark we are looking for is the adviser that has a turnover of $250,000 a year,” Abley says.
“We also want a planner that has created a success in a business.”
The limit on numbers is also controlled by the infrastructure the dealer group has put in place.
“We are very conscious of the infrastructure,” Botte says.
“If we go above that figure, the services will suffer.”
The back-office is outsourced to APFN, IOOF’s dealer support business.
This includes compliance, which Botte admits has become a strong component of the company’s culture due to Financial Services Reform (FSR).
Botte says the company constructed its own statement of advice (SOA) based on client needs.
“We looked at client needs and came out with 10 different SOAs,” he says.
With FSR’s focus on risk, especially risk in the planner’s business, Botte says Financial Partnership has concentrated on making its planners better business people.
“Our advisers have to have business plans and in the next 12 months all of them will have created a business plan,” he says.
With all these developments on the go, Financial Partnership is still in its growth stage and Abley is keen to point out that both he and fellow partner Botte are sticking around to see the job done.
“We are not practitioners, so we are here running the business,” Abley says.
“Too many practitioners have tried to run the business as well as give advice and it creates a conflict of interest. We don’t have that conflict of interest.”
