Count CEO Hugh Humphrey is keen for the firm to be a leader in the new world of advice.
In an interview with Money Management, Humphrey discussed the integration of Diverger, the evolving advice landscape and how he thinks adviser numbers can be improved to match consumer demand.
The firm completed its acquisition of Diverger in March which created an advice firm with 547 advisers across three licensees: Count, GPS Wealth and Merit Wealth. This was the first major acquisition by Humphrey, who became CEO in July 2022, and the licensee also completed 14 other smaller acquisitions during FY24.
As a result, funds under advice have risen to $34.8 billion and a further four acquisitions have already been enacted in FY25 across its equity partnership segment.
He said: “We did a huge volume of work around Diverger. It really started back in July 2023 with the due diligence and since acquiring it we have done work on people, culture, leadership and governance.
“There are always problems but none of them were unexpected. It’s gone really well, and we have had no regrettable departures. We expected $3 million in cost synergies, but it’s turned out to be $4 million, so we moved quickly and are turning to revenue growth.”
The acquisition of Diverger is just one of several advice movements which have taken place this year which have combined to significantly shift the shape-up of licensee rankings.
In September, AMP sold off its licensed and self-licensed advice division to Entireti for $10.2 million, and Insignia split off its self-employed advice division of RI Advice and Consultum into Rhombus Advisory in July. Insignia now only holds its salaried advisers in Bridges and Shadforth.
Once the AMP deal completes at the end of 2024, neither of the licensees – that once dominated Australia’s financial advice landscape – will feature in the top 10 largest licensees. This will instead be led by Entireti with over 1,300 advisers, followed by Count in second place.
Commenting on the deals, Humphrey said they represent an evolution of the financial advice marketplace and one where he believes Count can play a valuable role.
“It was a natural evolution of what needed to happen – advice had been an add-on for these companies and now they can focus on the consumer instead, and not advice.
“In one way, it’s an end of an era, and in another, the start of a new chapter for advice which is about changing clients’ lives and coming at it from their point of view, not about selling a product.”
Advice businesses nowadays, he said, are profitable and valuable assets as they improve their processes following the recommendations made in the Hayne royal commission.
“The recommendations of the Hayne royal commission seemed insurmountable at the time, but the advisers are running great businesses now and people are willing to pay.
“Count is undergoing change and so is financial advice; it’s a great time to be in financial planning. It’s terrific to be in an environment that is underpinned by demand and a lot of interest. We want to be a leader in the new world.”
Research by Investment Trends earlier this year found approximately 1.3 million individuals with unmet advice needs plan to seek an adviser in the next two years. The top three areas consumers would like to receive advice on, but currently are not doing so, include investment strategy, longevity risk and growing their superannuation.
This professionalisation of the space is being demonstrated in the volume of M&A activity – financial advice has been identified as an Australian M&A hotspot – and this includes interest from overseas. In September, AZ NGA announced it had entered into a strategic partnership with US asset manager Oaktree Capital which would provide $240 million in capital for the company to expand.
Humphrey, who recently returned from the Future Proof wealth management conference in California, said US firms are looking towards Australia to pick up advice firms at reasonable value compared to their US counterparts.
“The businesses are profitable and they are valuable assets if you look at the prices being paid, that goes to show there are people who are willing to invest in this space.
“There’s been a lot of interest in financial advice from public and private capital, and I don’t think that’s going away. The two drivers are the assets themselves and the fact that there’s clarity around transformation now [since the RC]. It’s pretty clear where we’ve landed is in having built high-quality profitable businesses.
“When I was in the US, a firm in Los Angeles offered 6.5x annual revenue to buy a high-quality, high-net-worth business and they lost out to one that would pay 10x. That goes to show the inherent value of the assets and the perception that maybe these companies in Australia are undervalued compared to the US.”
For Count itself, it wants to use FY25 to drive organic revenue growth in equity partnerships through uplifting financial planning revenue and owning more of the advice profit chain. It also wants to drive higher returns from increased scale and diversification in its Wealth division through managed discretionary accounts, licensing and its CARE portfolios.
In terms of inorganic growth and further acquisitions, Humphrey said the firms seek those advice firms which are integrated with accountants to stay true to the 44-year Count brand that was set up founder Barry Lambert.
“The businesses we tend to partner with or invest in are those with integrated financial planning and accountancy services or have joint ventures with accountants. Our skill comes in where we have always had an integrated model and the market recognises that we are a stand-out in offering both services.
“Whilst we talk about integration, it’s not one person doing both, they are both broad skillsets but what the client wants is not to have to give the same data to two different providers and have the same conversation twice. When it comes to do their tax return, they need the confidence that it has been done in an integrated way.”
New entrants
While financial advice is actively entering a new era, there is no denying that there is insufficient supply of advisers to match the consumer demand and Humphrey is eager to rectify this. Count has 45 candidates on their Professional Year program, but Humphrey acknowledges this is insufficient to “move the dial” on rebuilding adviser numbers.
Adviser numbers have fallen from a peak of more than 28,000 before the royal commission to around 15,500 nowadays.
He said: “The biggest challenge in advice is to get advice to everyone who needs it. There is a lot of demand from consumers and it is difficult to provide that. We want to streamline it, make it work for advisers and clients, and get it out there.
“Our PY program is terrific with dedicated resources to run. We took some time to define the program and it was a big investment in time and effort. It’s not just about getting them through the program but looking at their skills and capabilities and what they need to succeed as a financial planner, such as business development and pricing.
“We need more financial planners across the market. Forty-five is not enough to move the dial so we need more investment, going all the way back to education in school and university, to think about how we can get more people in and create pathways for them.”
Some advice firms have expressed fear about taking on PY candidates only for them to disappear at the end of their training, but Humphrey said it is important to demonstrate the value of the proposition and the benefits of working as an adviser beyond the PY.
“It’s about the whole value proposition offered by the firm, not just the PY program. We offer them a structured approach which plugs them into the Count business. We want them to progress to CFP qualification, and we recommend equity participation in the business they are working in.
“We also bring them along to our conferences so they can network and get mentors which opens them up to the world of Count which energises them, and it’s good to see them connecting with the business.”
In a bid to help build up the numbers, Count is exploring where other pathways could come from, whether that is via education and awareness among students or through international pathways.
Earlier this month, the Financial Advice Association Australia announced it had signed an international memorandum of understanding with FPSB India. One of the key objectives of this agreement is to enable CFP professionals to meet local regulatory requirements when seeking employment across borders. The partnership will ensure Indian CFP professionals can access FAAA-accredited CPD programs while in India, allowing them to complete required coursework before seeking certification or employment in Australia.
For Humphrey, he said he is particularly inspired by the education program set up by former AMP veteran and executive director of financial planning Steve Helmich called Horizons Academy, which offered adviser training and professional development.
“This is seen as the gold standard of adviser development. They would take intakes multiple times a year, primarily from career changers, go through the program and be employed then matched with potential firms for a job.
“Across our Count network, I still meet people who credit their career to Steve Helmich. The PY program is important, but we need to recreate Horizons so that financial planning can win out over other professions.”
