TheMoney ManagementTop 50 Distributors list ranks distributors by the total number of planners under one owner. But do more planners necessarily mean more funds inflows?
The Top 50 List reveals an assortment of fund manager and bank distributors. A handful of independent planning groups also appear further down the list. But the top distributors of financial planning products easily dominating the Top 50 list are the large fund managers and banks with more than one financial planning group tied to its brand.
It is not surprising that fund managers and banks, which operate several financial planning outlets with a massive national presence and huge brand recognition, are the big forces in distribution.
AMP is once again both the number one distributor and the group with the largest funds under advice (FUA). The total number of 1,803 planners, while a drop on last year’s figures, still reinforces the distributor strength of the AMP organisation and its wide investor reach.
The Commonwealth Bank (CBA) has fallen from its number two spot to fourth place, leaving the position open for the National Australia Bank (NAB). It moves up a place with 1,684 planners, with Professional Investment Services (PIS) slotting in at third.
Contributing to the CBA’s reduction in planner numbers was the sale of its 50 per cent stake in Ipac Securities last year. CBA also dropped planner numbers in other parts of its advisory network including Commonwealth Personal Bankers, which fell from 601 to 399 planners.
In direct contrast, several NAB groups grew in size including National Australia Financial Planning, which added 43 planners last year, and Godfrey Pembroke Financial Consultants, which grew from 108 to 187.
For groups of this size with such dominant distribution presence, a hefty funds under administration figure is not surprising. However, even with such large access to customers there can be a cap on funds under management capabilities.
“There is a point where supply crosses demand, there may be too many planners and not enough clients. So there’s definitely a correlation between the amount of clients you’ll see and the number of advisers on board,” NAB Adviser Distribution general manager Matt Lawler says.
Lawler says the number of advisers within a group needs to match customer potential, but the NAB’s external channel has a far wider reach.
He says NAB’s external self-employed advisers have an infinite capacity for growing the number of advisers who offer NAB platforms because of the unlimited access to potential customers within the wider public.
But what of the smaller firms that do not have the backing of big distributors, with fewer planners on deck, but still achieving significant funds inflows?
Financial planning group Garrisons, owned by the Challenger International group, is a good example. Garrisons deputy managing director Kim White says every Garrisons adviser works to a different business plan.
“Planners at the top end will write big amounts of business, but then there are those at the tail end who might be part time and it will be different for them,” he says.
Garrisons has 106 financial planners on its books and currently manages $2.5 billion. White recognises the distribution networks and relationships the larger dealerships can achieve through their size and says operating on a smaller scale can have some disadvantages.
“The larger groups do have pulling power at both the top end and the tail, and it can be more difficult for the smaller groups that don’t write as much business so do not get volume discounts from the dealers,” he says.
Another of the smaller groups, Stockford Financial Services, has a total of 70 planners operating out of 20 practices, but a similar amount of funds under administration, $2.2 billion (not including corporate super and DIY administration funds).
General manager Mark Rantall says Stockford’s high funds under administration figure in relation to the number of financial planners is attributed to the group’s high net worth clientele.
While Rantall says a distributor’s funds under administration figure can certainly impact a client, who he says like to know they are dealing with a substantial company, there is one point that both these smaller groups are aware of — more planners do not necessarily mean more funds.
“There is growth for growth’s sake, but we have a focus on profitable growth. There’s not much point in growing numbers if the business is not growing profitably,” he says.
White agrees:.“It’s not necessarily a numbers game in recruiting terms.”
