Easton sees adviser mix change drastically over FY21

Change of the adviser mix has improved average revenue for Easton Investment Management, as it makes an average of $28,000 in net revenue per full authorised representative (AR) and $4,000 for limited ARs.

In its FY21 results reported to the Australian Securities Exchange (ASX), net revenue from full ARs was $6.3 million, while limited ARs produced $1.4 million.

The firm said the business achieved significant growth in full ARs because of the Paragem acquisition despite losses in limited ARs due to accountants that left because of the Financial Adviser Standards and Ethics Authority (FASEA).

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Easton AR numbers over the last five financial years

Source: Easton Investment Management

Net profits after tax (NPAT) increased 70% to $2.98 million, revenue from continuing operations was up 33% to $91.7 million and net revenue was up 24% to $27.1 million, with the firm saying it hoped to triple its net revenue in the next three years.

The firm said it achieved record growth due to material growth in net revenue and underlying profit which was driven by momentum in both segments, elimination of all debt and material improvement in free cashflow, and backing of a new significant shareholder with an appetite to invest for growth.

Nathan Jacobsen, Easton managing director, said the wealth solutions business delivered 9% growth in net revenue and further improvement to net contribution margin.

“This division changed markedly in FY21, with implementation of a new pricing structure and the acquisition of Paragem, a boutique licensee of high quality, holistic financial advisers.

“This growth was partially offset by departures of limited advisers (accountants authorised for SMSF advice) due to rising industry costs and FASEA education reforms.”

The net outcome from this shift was a change in adviser mix towards a growing number of full advisers and the average net revenue per full licensed adviser improved by 17% over the year.

Easton said it provided its services to 3,000 accounting firms, 150 financial planning firms and 529 financial advisers.

Jacobsen said a continued shift to online training due to the challenges of COVID-19 saw the businesses gain a 55% uplift in online attendees and an improvement in average margin.

“As workplaces and work habits continue to evolve in response to the global pandemic, and consumer expectations continue to shift as a result, we predict continued growth in online training and an ongoing margin opportunity,” Jacobsen said.

“This year we also continued our extension into providing training to financial advisers, responding to growing demand for assistance with preparing for the new Financial Adviser Standards and Ethics Authority (FASEA) exam.”

There would be a final fully-franked dividend of 2.5 cents per share (cps) which brought the full year dividend to 9 cps which included a special dividend of 5 cps in January.

In its outlook, the firm had four strategic priorities:

  • Triple net revenue in three years;
  • Grow client base in the high margin accounting solutions business by 40% in the next three years;
  • Grow earnings before interest, taxes, depreciation, and amortization (EBITDA) margin in wealth solutions to 40% (on net revenue) within four years; and
  • Become the leading non institutional provider of services to both self-licensed and licensed advice practices.

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Great stuff Chris.

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