Madison Financial Group, a wholly owned subsidiary of Clime, has formed a strategic alliance with Practice Development Group (PDG), bringing combined funds under advice to $8 billion through 130 advisers.
A non-binding heads of agreement (HOA) has been signed to form an alliance that will consolidate the respective service offerings of each group and provide AFSL services to their respective adviser networks.
Under this agreement, the parties will work together on an exclusive basis to 30 March 2024 to finalise the arrangement. Clime has flagged that implementation of the structure is expected to be completed well within the seven-month period.
In an ASX announcement, the firm stated: “The alliance will involve the creation of a service company (Service Co) that is expected to generate significant operating synergies that will in turn generate strong operating leverage and greatly benefit both adviser networks.”
The combined group, it said, will “be positioned to attract advisers from the broader market that are seeking an improved licensing service”.
Clime will hold 10 per cent equity in Service Co valued at some $400,000 and has agreed to provide in-kind commercial services over an initial two-year period.
Additionally, Optimise Advice Services, a business wholly owned by Clime, will become 50 per cent owned by Service Co and 50 per cent by Clime, and will provide advice-related services to the self-licensed adviser community.
Service Co will be majority owned by advisers and will source licensee services from the combined groups and identify additional third-party services.
Annick Donat, Clime chief executive, said the agreement represents a “significant opportunity”
to build a peer-led community.
“Both groups have a long history in advice and this arrangement will ensure they continue to prosper. Our respective advisers will benefit from increased scale and cost reduction,” Donat said.
She adds that Madison FG and PDG share a similar operating ethos and cultural alignment in relation to the advice profession.
“The arrangement will also allow simplification of Clime Group’s business model and will provide enhanced opportunities to offer investment solutions, for example managed accounts and SMAs, to a broader advisory market. Advisers will also benefit from Clime’s commitment to education and marketing that is designed to encourage the community to seek qualified financial advice,” Donat said.
