Back in the early 1960s an enterprising student at Melbourne University struck a deal with some of his fellow students. Four years later, that student had his own accounting practice. Today, Bongiorno Financial Advisers runs a one-stop financial services shop. Jason Spits reports.
Back in the early 1960s an enterprising student at Melbourne University struck a deal with some of his fellow students. Four years later, that student had his own accounting practice. Today, Bongiorno Financial Advisers runs a one-stop financial services shop. Jason Spits reports.
Studying accountancy and selling life insurance part time Joe Bongiorno told medical students that he would do tax returns for free if they bought an insur-ance policy after graduation.
This approach quickly gathered momentum and by 1964 when Joe Bongiorno started his own accountancy practice he had already captured a small cache of clients. And best of all he was cross-selling the life insurance and accounting sides of the business.
According to Bongiorno Financial Advisers’ director of financial planning Chris Garnaut, this approach worked so well that for many years the group has been dominant in servicing the financial advice needs of much of the medical profes-sion.
“Ask most general practitioners over the age of 40 and they would be familiar with the Bongiorno name,” Garnaut says.
However Garnaut says the more unusual aspect of the business is its concentra-tion on a particular sectors of investors, or as Garnaut describes them, verti-cal markets, which has come about from that simple approach its founder took nearly forty years ago.
“The group was very successful in the vertical market area with the whole focus in the past having been the medical profession. When the group started to pick up more proper authority holders in the early 90s there was 30 years of success-ful experience in this approach,” Garnaut says.
“We told the new guys back then to create new vertical markets and replicate that formula by going to industry sectors and seeking clients who had high lev-els on investable income.”
The road Bongiorno’s travelled to get to this point is worth examining.
Within a few years of starting out the group was offering accountancy, real es-tate, life insurance and finance broking and financial planning services.
After working as agents of Legal and General for 13 years, the group became agents for National Mutual in 1977. At its peak Bongiorno wrote 18 per cent of National Mutual’s life business.
This relationship lead to the group listing in 1987. National Mutual took on a majority shareholding before the group delisted in 1989. Ownership has remained private ever since.
“We returned to the sixties model after the 1989 privatisation,” Garnaut says.
The group kept the accounting arm on board, creating propriety partnerships in Melbourne and Sydney and continued to offer accounting services alongside finan-cial advice.
As the group re-aligned itself as a dealer group, the focus on vertical markets was reinforced.
“Since about 1991 each proper authority holder has their own area of specialisa-tion,” says Garnaut, who has built his own practice by working with McDonald’s franchise owners.
The number of proper authority holders with the group is currently at 47 with half of that number based in offices in Melbourne and Sydney with the balance along the east coast.
Between them they are responsible for over 18,000 clients and have $950 million of funds under advice.
“We have a diversified range of proper authority holders who have strengths in funds management through to selling general life products,” Garnaut says.
“They are a blend of salaried and commission planners based in our main offices and contract planners working in external offices.”
Business development manager Margaret Mote says commissions are split between planner and dealer group with the majority going to the planner.
“Each licensee with their own practice can charge what they want but we do set limits on them which are dictated by market, in the areas of fees or commis-sions,” Mote says.
For this licensees receive compliance, due diligence, product information and updates and research.
This is gathered from Assirt, van Eyk, FPI, PIR and BIS Shrapnel with additional stock broking research from JB Were, Macquarie, Lonsdale and Colonial for the direct equities business.
The data is run through an internal research committee of six, which is chaired by Garnaut and fellow director John Dixon, and is filled out with Mote and three others.
This is then mixed with micro-research, vetted by Mote and run past the commit-tee to create the approved list.
“Since we are dealing with wealth accumulators and entreprenurial clients, straight off the rack products won’t turn all our clients on. We try to go out-side of the nine dots,” Garnaut says.
At the same time the group also monitors conduct and supplies training and sales and marketing to each planner in the group.
Mote points out that planners who join the group are not charged any fees to come onboard but still need to jump a few hurdles before receiving a proper authority.
The usual levels of education and experience are calculated via a points system which is balanced with a qualitative interview which seeks to ensure a cultural fit within the organisation.
“We seek to find if they will add value to both sides of the relationship. Our strength is this cultural fit, and it is reflected in the fact that the original group of planners who joined in 1991 are all still with us,” Garnaut says.
“This is a strong theme within the group and we work on it via strong profes-sional development but also personal development.”
To this end training has two faces with about ten sessions a year dedicated to helping planners and staff in their development as industry professionals.
This is balanced out with quarterly coaching sessions concentrating on building the staff as individuals.
“The training mixes quantitative and qualitative elements to focus on the devel-opment of products and planners,” Garnaut says.
To date, 55 per cent of Bongiorno planners have reached certified financial planner (CFP) status with Mote expecting that number to reach 80 per cent by the end of this year.
“We are thrilled to say there is an emphasis on this aspect of development and by 2002 if planners have not reached the CFP level we will remove their proper authority status,” Mote says.
“We don’t want rookies to train from the ground up and there is also no room for apprentices.”
This insistence on prerequisite levels of expertise is something that Garnaut says will also dictate the future of the group.
“We will also happily welcome any experienced planners that have the necessary cultural fit,” Garnaut says.
“Yet our main energies are focussed on our current crop of advisers. We would rather keep them happy, get better output from them and as a result a much bet-ter output from the whole business.”
Vital Statistics
Name: Bongiorno Financial Advisers
No of proper authority holders: 47
Ownership: privately held
Research: FPI, Assirt, van Eyk, PIR
Funds under advice: $950 million
Founded: 1964
Wrap account/ master trust: Asgard and Navigator primarily used.
Key Figures: Tony Bongiorno – managing director
Next Conference: this month, San Francisco
