Michael Summers has managed licensed financial planning dealerships for more than 20 years, which must be some sort of record.
Summers lays claim to many things that are accepted practice today, such as equity ownership by planners.
“I have always understood the needs of the financial planner when running a financial planning business,” he says.
In 1982 Summers, along with five partners, founded what he claims was the first purpose-built financial planning company. It operated on an unrestricted dealer’s licence.
“The vision then is the same vision I have today,” Summers says.
“We wanted to set up a professional dealership that supported independent financial planners.
“Even then, the institutions were not acting in the interest of the client and that left a vacuum we aimed to fill.”
The original planning firm saw the parting of the ways of the founders and, as a result, Summers formedAustralian Investment & Financial Planners(AI & FP), based in the southern suburbs of Brisbane.
“The prime function of AI & FP was to be the focal point for leading financial services practitioners who wanted to build quality businesses based on the highest levels of professionalism and service,” he says.
“It is a service organisation that provides the legal, administrative and technological support to independently owned financial services businesses.”
Planners who join the AI & FP co-operative remain owners of their businesses and Summers says the relationships are very much focused on partnerships.
“AI & FP has been established for the long haul, providing legal, administration and technology on a co-operative basis,” he says.
“It provides the framework needed for the development of their businesses and the continuing profitable operation of them well into the future.”
Before a planner can join the co-operative, AI & FP undertakes due diligence on the background of the planner. Summer says usually they look for a business with more than one financial planner, as this signifies the potential for future growth.
“I believe the day of the single planner business is numbered,” he says.
Planners in the business are required to pass PS 146 before joining the co-operative. They will also have to produce a business plan for future development of the business before being accepted.
“We are looking for people who are technically and academically sound,” Summers says.
The co-operative expects all planners to be moving towards achieving DFP 8 and CFP status and offers training to help achieve this goal.
Training is one part of the package offered to planners joining the co-operative.Integratec’s On Track program monitors the currency of the planner’s education standards and the IntegraText financial planning reference manual is provided electronically to AI & FP members and updated monthly.
AI & FP holds both an unrestricted securities dealer’s licence and registration as a life insurance broker.
Other services in the package include professional indemnity cover, modeling software, online share trading, paraplanners, and access to van Eyk and Morningstar research.
“We tailor the package to suit the individual practice,” Summers says.
“We treat the adviser joining us as an individual and they can take whichever services they need to grow the business.”
However, an important part of the package is technology.
“It is not feasible to run a best-practice financial planning business without technology,” he says.
“We encourage businesses to use our dedicated IT group, which can run an audit of the status of technology being used and make recommendations on improvements.”
AI & FP has had a long and close relationship withInvestment Data Technologies(IDT) and provides advisers with IDT financial planning software.
The software delivers managed investment information, share prices and dealer-generated data overnight through a modem link or via the Internet.
Compliance is handled by AI & FP using both in-house or external specialists for periodic independent audits, but Summers believes monitoring must be an all-year-round function carried out in a straightforward way that intrudes as little as possible on the day-to-day running of the individual practices within the co-operative.
Planners have the option to work either on a fee-for-service or commission basis.
All fees, commissions and brokerages are paid on behalf of planners into dedicated accounts treated like trust accounts. No corporate operating expenses are taken from these accounts.
“We recognise that the fees and commissions belong rightfully to the practitioners that have earned them,” Summers says.
“The co-operative is no more than an administrative clearing house for their money.
“The fees for using AI & FP services are negotiated individually with each person joining the business. Some people need less support, so they pay a bit less.”
AI & FP now has planning businesses operating in Queensland, Sydney, Melbourne and regional centres.
Summers says South Australia and Western Australia are future areas of growth.
However, as the co-operative grows, the more attractive it becomes to institutions.
“A buyout is not a major target for us, but it would be foolish to ignore evidence of national and international trends, which indicate that successful financial service groups inevitably become attractive buyout targets for major institutions,” he says.
“Capitalisation of funds under advice and risk premiums are the key to realising the true value of businesses.”
Proceeds from a potential sale would be divided equally between the shareowners in AI & FP and planners whose efforts contribute to the value of the company.
Summers says the co-operative remains independent of any bank or insurance company shareholding.
Summers has covered all eventualities with AI & FP and the organisation could be described as being ‘ship-shape’.
It’s not surprising considering he spent more than 25 years in the Royal Australian Navy as a submariner before becoming involved in financial planning.
Vital Statistics
Established:1995
Advisers:65
FUA:More than $500m
Staff:8
States:Queensland, NSW and Victoria
Offices:37
Ownership:Private
Clients:More than 10,000
Key Figures:Michael Summers (chairman and managing director); David Hobbs (director)
Platforms:Mosaic, AustChoice, Australian Skandia, First Choice, Navigator, Asgard
Research:van Eyk, Morningstar, AdviserEdge, PIR
