Operating in a tremendously volatile market, the past 12 months have hardly been business as usual for the financial services industry.
Last year, as the world braced itself for the economic turmoil that lay ahead, industry participants were surveying their options; as the markets went down, so did dealer groups’ funds under advice, and adviser numbers seemed perpetually under threat.
Now, as the market shows signs of gradual recovery and the dust begins to settle, dealer groups have shown themselves, for the most part, to be remarkably resilient.
Amid the slew of redundancies in the financial planning sector, several dealer groups have managed to hold on to their staff and, if anything, have boosted numbers.
Elsewhere, dealer groups are demonstrating their focus on the customer — throughout the uncertainty, reassuring their clients and cementing adviser relationships have been of prime importance. And, of course, propping up adviser networks has been a crucial point for dealer groups.
On the 10th anniversary of its Top 100 Dealer Groups survey, Money Management has once again compiled an annual report measuring the size of dealer groups according to funds under advice (FUA) and adviser numbers, with the top 100 dealer groups ranked according to the former (see pages 16-19).
Essentially, while dealer group rankings haven’t shifted significantly — in fact, there are few key movements — FUA are, not surprisingly, down across the board.
Roll call
While there is no simple method for measuring dealer group performance, some points can be easily broken down.
A scan of the figures shows that the top 20 dealer groups according to FUA vary only slightly from last year, with AFS Group and Centric Wealth Advisers just missing out on making the list again this year.
Familiar names took out the top 20 places, with AMP Financial Planning once again topping the list.
Reporting total FUA to the end of March this year of $32.816 billion, AMP was closely followed by Macquarie Equities — this year’s non-bank Dealer Group of the Year — which climbed to second place from 25th position in 2008 with FUA of $32 billion, a difference that can be explained by the group’s inclusion of all its operations for FUA, rather than its strategic financial planning business alone.
ABN Amro Morgans, last year’s Dealer Group of the Year (non-bank), came in at third place with FUA of $25.9 billion, down one spot from 2008.
Meanwhile, this year’s bank Dealer Group of the Year, Commonwealth Financial Planning, came fourth with $20.886 billion FUA). Westpac Banking Corporation (fifth with $16.297 billion FUA) rounded out the top five, edging out this year’s largest dealer group Professional Investment Services (PIS), which recorded FUA of $16.1 billion.
Another newcomer to the top 20 was WHK Group, reporting FUA of $7.711 billion. Old timers Count Financial (FUA of $10.1 billion) and NAB Financial Planning (FUA of $10.022 billion) remained in exactly the same positions as last year, taking out seventh and eighth places respectively.
Hillross Financial Services climbed a spot to occupy ninth position, reporting FUA of $8.691 billion, while ANZ Financial Planning dropped a place to come in at 10th with FUA of $9.073 billion.
Taking care of business
When discussing the challenges of the past year with heads of dealer groups, their major concerns — apart from the unrelenting motif of the global financial crisis — became quickly evident: they have been exerting even greater energy into taking care of their clients but also, very importantly, have focused on providing adequate support to the adviser networks driving the success of their businesses.
“I think our planners [are] the key to our success,” said Michael Guggenheimer, chief executive, AMP Financial Planning.
“Our planners have very long-term relationships with their clients, they remain very close to their clients and, therefore, I believe, that there are still opportunities that are abounding despite some of the uncertainties in markets.”
Planner numbers have grown at AMP, a result Guggenheimer said reflects the strategy it has been embarking upon for the past few years.
“And that involves trying to grow the scale of our distribution and also work with our practices to make them more productive.”
While numbers are slightly down at Commonwealth Financial Planning, managing director Tim Gunning confirmed the drop was due to natural attrition, not redundancies. In fact, he said in the past year the group has focused heavily on flexibility for its planners, encouraging staff to work part-time if needed, particularly its female planners caring for families.
“We’ve got the largest percentage of female planners of any of the top 10 dealer groups,” Gunning noted. “We’ve got a number of situations where we’ve got people who are job sharing and that’s working well.”
With planner concerns in mind, some dealer groups are reassessing their models and structures.
Following the challenges of the past year, RetireInvest is undergoing structural change, according to Paul Campbell, the dealer group’s head. In particular, it comes down to growth through an “aggressive recruitment drive within the market”.
RetireInvest is not the only group recruiting. Millenium3, which reported $6 billion in FUA, has had a busy year expanding the business via mergers and acquisitions. In addition, the group is “organically growing its adviser base”, according to joint managing director Darryl Foster.
Like RetireInvest, Millenium3 is undertaking a recruitment drive, and like many other dealer groups, it’s taking a look at how to add value to services for its adviser practices.
Despite the number of changes among dealer groups, some are keeping the adjustments to a minimum.
For ABN Amro, it’s business as usual — the group is concentrating on the core parts of the business, according to David Codey, director of adviser and marketing services.
Shadforth Financial Group, which came in at 15th position this year with FUA of $7.78 billion, has just come off a merger of several financial planning firms, and looks primed for better times.
Nick Bedding, chief executive at Shadforth, said the group has been working on improving its service offering along with developing more advanced tools and services for its advisers.
“The firm is now very well positioned to grow as one of the few privately owned groups that is big enough to compete with the institutions that dominate the financial planning landscape.”
Customer care
Ensuring that financial planners are able to provide accurate advice and enhance client relationships means dealer groups have had to raise the bar. Some, for example, have been busy implementing initiatives to keep investors in the loop.
Macquarie Equities has stepped up its client communication efforts, providing up-to-date research and regular client briefings to keep them well informed.
The sentiment is no different at AMP Financial Planning: “The one thing we know is that … clients appreciate being kept regularly informed, and the more regularly informed that they are, the more aware that they are of their position, their need to continue with their long-term strategies.”
However, as Gunning pointed out, dealing with shaken investor confidence after the trauma of the crisis will remain a challenge for some time.
Alan Logan, head of ANZ Financial Planning, acknowledged the erosion of investor confidence as a result of significant volatility and liquidity issues across a range of sectors. However, while ANZ has not been immune from the challenges over the past year, he said its people had worked hard to support customers.
AMP’s Guggenheimer said the group was attempting to anticipate the implications of future developments in order to work with the group’s practices around the country to prepare them.
“What I know is that those who consider the future, then adopt and adapt to the changes that are necessary, come out the other side in an even stronger position,” he said.
“So the position that we’re trying to take with our practices is to work closely with them to make sure that they’re in a position of strength, no matter what the future changes may entail.”
