Despite the appearance of uniformity not every dealer group is the same when it comes to major issues of structure and business practice. Jason Spits looks at a Queensland group who tore a few pages out of the book when it decided to begin doing business.
Imagine going to work as a planner for a new dealer group and being told that any well researched, viable and legal investment is open and available to clients. Add to this the fact that the research will be done by yourself and that clients will pay handsomely for the privilege.
Darren Wise one of the directors of Financial Planning Services (FPS) is hoping a number of advisers will indeed imagine that scenario and make contact with him, as his group seeks to build its numbers.
Currently the group has a handful of planners on board and while it may not be the biggest dealer in the industry, what sets it apart from most of its small and larger peers is that the group has no recommended list. It also offers direct shares to clients and works on a fee for service basis only.
Wise says the absence of a recommended list is intentional and the group has always had a freelance style over its 15 year history and this continued after gaining an unrestricted dealer’s licence four years ago.
“There has been no list since the beginning and we have never had any automated system. We hope that planners in our group are experienced enough to pick investments. This is what financial planning is actually all about,” Wise says.
The reluctance of the group to have a recommended list is due to the belief that advice being handed out by planners is being controlled by the dealer through such structures, which means it ultimately controls the adviser’s business.
“We have worked our chosen path for many years and have added value through this and feel there is no list which gives the same level of freedom to advisers,” Wise says.
“A proper authority with experience will get opportunities in the markets, and if they have done their research they will find areas in which they can add value for clients. With a recommended list we feel a planner can’t add the same value as many of these opportunities never appear on that list.”
This model of course shifts the research back onto the planner and Wise says FPS is still well serviced in that area receiving direct shares data from Sanford and managed funds research via Lonsdale Securities through its Accompli Technologies Llink product.
“We are happy for planners to use whatever research they like or will provide it to them if they need it but in the end we do our own research according to how investments suit clients. It comes back to whether we want to stand out for our clients. It does take time but clients are prepared to pay for it.”
The concept has not damaged the business at all with FPS boasting over $60 million in funds under management and around 400 active clients who, according to Wise, are very pro-active and seek a greater edge in their investing.
However he is quick to point out that this growth as well as the absence of a set list has not come at the cost of compliance systems.
“Our current systems are rigourous and we have outsourced the issue of compliance to DBOS (Zurich’s Dealer Back Office Service) and we will know when certain investments are being placed,” Wise says.
“Our broking service, through Sanford’s Virtual Broker, supplies transaction notes to the dealer as well so we can track direct share trades. One of the reasons we wish to remain small is that we can do these things.”
The group makes little use of master trusts, as these contradict the philosophy of the group but Wise says FPS will make use of Flexiplan for a number of administration purposes. However he says most administration is usually done in-house as is the group training.
Wise hopes these factors when combined will attract planners who are seeking to move their careers into another part of the planning industry.
“Some planners cannot pick their own investments so they are definitely not our target but those who can are in our site because we are looking for boutique operators.”
“With a potential ASX listing on the cards, if we can build the right business, we are looking for like minded planners who are very proactive in their businesses.”
At present the group has just four planners and they will all be CFP qualified within six months but the long term plans do not include growth beyond about 30 proper authority holders.
The reason for this is that the group does not want to lose it’s boutique planning approach but also as Wise admits the compliance issues involved are easier to deal with at a smaller scale.
“We are looking at boosting the size of the group as it will give us more influence and open doors for the group but we also want the ability to be a nimble organisation with clients and funds under management of some size as well,” Wise says.
“We are not greedy, we are successful now and any moves to become too big will fall flat. The system is bedded down already and we are targetting potential recruits now. It has taken six months to build this model and we are ready to populate it.”
Fact Box:
Name: Financial Planning Solutions
No. of CFPs: 4
Ownership: directors
Research: inhouse and AccompliLink
Funds under management: $60-70m
Founded: 1985
Key figures: Howard Fraser – managing director, Darren Wise, Shaun Fitzgerald – directors, Keith Poole – consultant
