Count Financial has revealed it is offering fee discounts of $10,000-$15,000 per adviser in order to attract quality advisers to the business and compete against rivals as adviser departures weigh on its financial year results.
It saw net profit after tax (NPAT) of $1.09 million, down from $1.78 million in FY20, with significant changes in the second half of the year as grandfathered revenue dropped from $3.2 million in FY20 to $0.13 million, its company results said.
Some 76 advisers left the business, including 10 in June, while it onboarded 56 new advisers which brought the FY21 total to 248, 89% of whom had passed the Financial Adviser Standards and Ethics Authority (FASEA) exam. The total was 20 advisers less than in FY20.
Advisers produced 17,690 advice documents, up 46% from 12,158 in FY20, which worked out to be an average of 71 per adviser.
It also alluded to “competition” with rivals to recruit quality advisers, saying: “Competition by some players to recruit quality advisers has included significant fee discounts and other incentives.
“To effectively compete in the current dynamic market, fee discounts ranging from $10,000 to $15,000 per recruited adviser for six to 12 months have been provided. Given the short-term nature of these fee discounts we have made this trade-off against short-term earnings to build a stronger cohort of quality advisers with a medium and longer-term perspective.”
It said there was a pipeline of 69 firms and 199 advisers with total potential gross business earnings
The combination of the adviser departures, tapering fee discounts and cessation of grandfathered revenue meant a clear earnings ‘run rate’ would not be seen until 2H22 or 1H23.
In his shareholder letter, CountPlus chief executive, Matthew Rowe, said: “There is a supply-side constraint in financial advice, but we believe there is a growing unmet need for quality financial advice in Australia. A repurposed Count Financial stands ready to take advantage of the increase in consumer demand for high-quality financial advice in Australia.
“Timing of adviser departures weighted to the first half, short-term onboarding fee discounts and the cessation of grandfathered revenue all show a business in transition, but with a persistent focus on longer-term strategic growth objectives.
“It is our view that Count Financial has the potential to become a significant contributor to the earnings of CountPlus in the medium term.”