Clime Investment Management is actively winding down its retail offerings and selling off retail clients after identifying that the advice market is increasingly difficult.
Speaking at the firm’s annual general meeting on 21 November, chair John Abernathy said winding down its retail offering has been identified as a logical step.
Instead, it will expand its fund offering to Australian wholesale clients, those self-directed investors who meet the wholesale investor test.
The firm currently has $105 million in funds under retail advice compared to $932 million in private wealth.
He said: “While our managing director initially “embraced complexity” to see where the dust would settle, it has been clear for some time that small retail funds without strong differentiation and significant marketing will fail to deliver a reasonable return to shareholders.
“Large retail fund failures, both manager and product restrictions proposed by investment platforms, and the declining numbers of retail advisers, suggest that the outlook for small-scale retail funds has become difficult and it may be terminal.
“The success we have seen over FY25 strengthens our confidence to pursue the direct marketing opportunity with vigour.”
His comments echo those made by FAAA chief executive, Sarah Abood, who warned a consequence of costs related to the Compensation Scheme of Last Resort could see advisers move away from retail to the cheaper wholesale marketplace.
In light of this, Abernathy said Clime IM is moving to rationalise its fund offerings and develop strategic partnerships with larger fund groups. It has also closed two funds; the $103 million Clime Australian Income and the $32 million Clime Smaller Companies.
The Australian Income fund was a multi-asset fund that invested in income-generating assets for investors seeking capital growth. Meanwhile, the Smaller Companies fund is a portfolio of Australian smaller companies targeting strong risk-adjusted returns.
However, it is not completely moving away from multi-asset as it will introduce bundled multi-asset investment solutions via IMA and MDA solutions.
Last week, Clime announced it had already sold a portion of its retail client book to an external financial planning firm for $1.6 million. Clime IM entered into a binding term sheet with an external firm operating under its own AFSL to purchase a retail client book, including client servicing rights and associated revenue stream.
Speaking to Money Management, managing director Michael Baragwanath said: “This is just a portion of our clients but we will look to place other clients with advisers that we think are a good fit and there are no planned redundancies.
“Clime will continue to provide retail advice in circumstances where wholesale clients require it (eg SMSF advice to members regarding their superannuation or pension) or for family members of our private clients.”
In terms of growth initiatives, Clime IM has welcomed $350 million of advised assets into the group and is negotiating closely with two regional firms while also being mandated as manager for approximately $75 million in charitable funds.
“Our size, growing towards $2 billion under advice, management and direction plus our listed public status creates an advantage for us whilst many competitors will struggle for recognition.”
