AZ NGA acquires outsourced HR firm

AZ NGA Paul Barrett acquisition

3 November 2023
| By Jasmine Siljic |
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AZ Next Generation Advisory (AZ NGA) has welcomed an outsourced HR company under its wing, as chief executive Paul Barrett highlights five key themes creating the “biggest opportunity in a generation”.

The financial advisory group has acquired Catalina Consultants, an outsourced human resources company with 17 HR consultants.

Barrett hinted at the acquisition when speaking to Money Management last month, with the deal representing AZ NGA’s horizontal integration approach.

The chief executive described the transaction as the group’s second investment in the business supply chain which will allow both parties to fulfil key strategic priorities.

“Catalina Consultants is a successful business that has grown organically and attracted high quality corporate clients including a number of AZ NGA firms,” he commented.

The business will continue providing its HR services to a wide range of companies across various industries. AZ NGA’s deal aims to help Catalina Consultants expand its relationships and reach.

Barrett added: “This partnership also enables AZ NGA to secure capability and capacity for our network, which is increasingly important given the current skills and talent shortage.”

Merilyn Speiser, founder and principal of Catalina Consultants, explained that the acquisition will allow the HR firm to more efficiently achieve its growth ambitions. These include reaching into new areas such as recruitment and HR technology.

Since 2015, the financial advisory group has completed 130 M&A transactions. This year alone, the firm executed 14 transactions: 10 by its member firms and four by AZ NGA directly. By year end, the company could reach 18 transactions, Barrett expects.

Five key themes in advice

The CEO also shared his optimistic outlook on the current advice landscape with Money Management.

“There’s never been a time in the financial planning industry’s history like now. I doubt there will be in my lifetime again,” he recognised.

This unique period is largely driven by the amalgamation of five key thematics playing out.

Barrett first identified the banks’ mass “overnight” exit out of advice, which has led to immense fragmentation in the industry. 

“They left all at the same time. If you think about it, 85 per cent of financial planners in Australia, not that long ago, were tethered to a bank. They’re all gone now. So by definition, 85 per cent of the industry are no longer tethered to a bank. 

“There’s this wonderful opportunity to stand in the position that banks were in before and build tethers to these businesses that [advisers] are desperately looking for.”

Systemic changes to demand and supply is a second key factor, according to Barrett. With the COVID-19 pandemic driving demand for advice due to consumer anxiety and an economic downturn, amidst dwindling adviser numbers, the cost of advice has risen as a result. 

“Simultaneously, for the first time in 30 years we’ve got regulatory tailwinds,” he identified as the third theme.

“Number four is the modernisation and corporatisation of the small and medium-sized enterprises (SMEs) themselves. They’re all saying to each other, ‘We’ve got to get bigger and stronger and become more corporate.’”

The flow of capital and advice margins becoming more profitable is the fifth thematic.

Barrett concluded: “You take those five things all happening at exactly the same time, and you have got the biggest opportunity in a generation in this industry.”

AZ NGA is harnessing these five trends to deploy capital into its member firms and ultimately expand its advice footprint across Australia.

Looking ahead, the CEO projected the rise of super-sized advice firms, while smaller family-run businesses will eventually fade out. 

“As a result of that, you’re going to have the emergence of a whole set of new players. In five years’ time, if you take a photograph of who the players are in the [advice] sector, it will be a completely different group of players to who it was five years ago, or even in the immediate aftermath of the Hayne royal commission.

“You’re looking at two completely different pictures. One is a vertically integrated bank model, while the second photo will be of horizontally integrated, large quality advice firms that are pure advice companies and aren’t relying on subsidies from products to survive,” he said.

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