Financial Spectrum splits business to target growth

Independent financial planning firm Financial Spectrum has split its business in two, with spin-off arm Spectrum Wealth Advisers experiencing rapid growth since the split in February this year.

Overall, Spectrum’s Australian financial services licence has grown from six authorised representatives to 68 since the move, according to Spectrum’s head of strategy Brenton Tong, who said the group was aiming for around 150 advisers by the end of this financial year.

Tong attributed to the growth to a gap in the market, where advisers wanted the support of a larger dealer group but didn’t want to be authorised under an aligned dealer group.

Many advisers are fed up with the controls of other licensees, and profitability has also been difficult for many, Tong said.

Advisers who are earning $350,000 are paying $50,000 to a dealer group, then being told what wrap they can use and being sent on professional development days where they don’t learn anything but get to tick some boxes, he said.

“That’s the fee you pay to operate, and that’s not good enough in the current market,” he said. “Advisers are fed up with not getting what they’re paying for.”

Spectrum Wealth Advisers has no ties to other financial institutions through shareholding, personnel or products, Tong added.

In the current market it isn’t profitable to sit with around 50 advisers – a group either needs to be a small tight-knit boutique with tight controls on costs or it needs to get big, and Spectrum has targeted the latter option, Tong said.

Spectrum will also be working with advisers who are transitioning to a fee-for-service model, and has a couple of different models and external coaches to help them make the shift, he said.

“We’re positioning to be a very serious player in the independent space. We’re going to try a slightly different path of delivering what people actually want and getting paid for it,” Tong said.