Fortnum CEO sharpens focus on organic adviser pipeline

fortnum private wealth Fortnum Neil Younger licensees financial advisers

12 April 2024
| By Jasmine Siljic |
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Fortnum Private Wealth remains focused on driving organic growth in 2024 and implementing benefits of scale from its recent acquisition.

On 30 November last year, Fortnum completed its acquisition of Australian Unity Personal Financial Services’ (now called PFS) Australian financial services licence (AFSL).

The deal saw Fortnum welcome an additional 150 advisers into its network, leading the firm to see the highest adviser gains for the 2023 calendar year with a growth of 157 advisers.

According to Wealth Data, Fortnum sits in seventh place with 379 advisers among the top 10 licensees by number of advisers (as at 28 March).

Neil Younger, Fortnum group chief executive and managing director, shared further details on the company’s plans for 2024 following the acquisition.

“The Fortnum business now runs two AFSLs: the PFS business and the Fortnum licence. Between both of them, we’re sitting now with about 400 advisers across the two brands. The acquisition served as a significant contributor to the growth,” he told Money Management.

The PFS deal was the first significant M&A action and brought additional scale into the business’s operating model, but Younger said it is unlikely to do more in the immediate future.

“Both Fortnum and PFS have had a healthy and steady growth rate organically in terms of advisers that are in the market looking for new licensing solutions. In our view, they both have attractive value propositions, receive strong adviser attention and good growth in terms of new businesses assessing them as a suitable home,” the CEO explained.

“There’ll be more [M&A deals] on the landscape for the future, but for us as market participants, our focus has been on ensuring we’ve got the right support structures to run these two businesses well. Adding the benefits of scale into those businesses effectively is really where our focus is.”

He added that the growth was particularly pleasing considering the reduction in adviser numbers and in licensee switching. Adviser numbers have reduced from its peak of 25,000 pre-Hayne royal commission to just under 15,600 currently.

“There’s a lot fewer advisers moving from home to home. The trends generally around advisers moving have been slowing, and a lot of that has to do with the businesses getting larger.

“It’s also fair to say the value propositions of licensees continue to strengthen, so there’s less reason for people to be looking for a new home.”

Market competitor Sequoia Financial also previously identified licensee switching as a focus for the firm and ruled out acquisitions as a growth strategy.

Elaborating further on the PFS acquisition, Younger said the key motivation for the deal was the benefits of scale that it would bring to enhance current and future efficiencies.

“It will allow even further enriching of resource capability and for us to apply quite a bit of attention to future opportunities and development.

“So how do we really change and solve the problems around advice and capacity? Obviously being combined and larger means we have more capacity than the Fortnum and PFS businesses individually,” the chief executive remarked.

For 2024, Younger expects to see further market consolidation as smaller practices feel the pressures of operating.

“I think most executives running a licensee business would realise that scale is not just a benefit; it’s probably necessary. Some of the smaller businesses that remain in the marketplace will struggle to compete with the re-emerging larger ones – so we’ll see more activity off the back of that.”

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