Financial advisers search for support services and independence

More financial planners than ever work under a dealer group model – and groups that did experience a dip in planner numbers in the past year plan to reverse that trend, writes Benjamin Levy.

It is clear from the data in the 2009 Money Management Top 100 Dealer Groups survey that, despite the uncertainty in the share market and the economy as a whole, the numbers of financial planners working under a dealer group have continued to climb.

Fastest growing

Millenium3 Financial Services has continued to take on financial planners at the fastest rate among dealer groups, signing on 179 financial planners in the past 12 months.

This is an even higher rate of growth for the dealer group compared to last year when it took on 94 financial planners, according to the 2008 survey.

As of March 31, the group totalled 778 advisers, placing it at number five, the same ranking among the top 10 dealer groups as last year’s survey, in terms of the total number of financial planners.

Darryl Foster, joint managing director of Millenium3, said the group was committed to continuing its recruitment drive, which would further the group’s growth.

During 2008, Millenium3 purchased Financial Lifestyle Solutions, Pinnacle and Partners and merged with IFA Securities.

But the jump in the number of financial planners being recruited to dealer groups isn’t always a case of trying to attract financial planners with their services.

Darren Pawlski, Wealthsure dealer group head, said the jump in financial planners within Wealthsure was mainly due to financial planners seeking out an independently owned dealer group.

Pawlski also attributed the rise in planner numbers to the group’s improved service offering and employing more practice managers.

Wealthsure, which added 71 financial planners during the year, came in second for growth of adviser numbers in this year’s survey, a jump of five places compared to last year’s rankings.

Wealthsure didn’t market the fact that it was an unaligned dealer group, but recruited through word of mouth, Pawlski said.

The group wanted to continue expanding at its current rate, he added.

Newcomers to the top 10

According to this year’s survey, six of the top 10 fastest growing dealer groups in terms of adviser growth are newcomers to the ranks. They include AAA Shares, Securitor, Financial Services Partners (FSP), Professional Investment Services (PIS), AFS Group, and Australian Finance Group.

PIS, which dropped to 77th place in terms of adviser growth numbers in last year’s survey after taking on 115 advisers in 2007, has moved up to number seven for adviser growth, taking on 48 financial planners throughout the past 12 months.

PIS dealer group head Robbie Bennetts said the business development support company, Associated Advisory Practices (AAP), a joint venture between PIS and independent boutique practices, was responsible for the growth in the group’s financial planning base. There are more than 700 planners attached to AAP.

Total numbers

The rankings of the top 10 dealer groups for total financial planners has not been static compared to last year’s survey, with hiring and losses of planners during the year creating significant fluidity.

Westpac Financial Planning, which was ranked at number six in the 2008 survey, dropped out of the top 10 dealer groups altogether, moving to number 12 in terms of total financial planners, after losing 122 planners during the year.

In contrast, Charter Financial Planning, which came in at number 10 in last year’s survey for total number of advisers, added 33 financial advisers to boost it to number seven on the list, with a total of 478 financial planners.

“We do have plans to grow the numbers in Charter [Financial Planning], but not at the expense of quality. That is our strategy; steady solid growth,” said Paul Williams, national manager for AXA and Charter Financial Planning.

A key value for advisers and a segment of the adviser market was retaining the independence of their own practice brand, Williams said.

Charter also invested in building a business partnership offer between its financial advisers and the accounting industry as a way of expanding the client base of its financial practices, which was proving an attractive proposition for financial planners in the industry.

“It’s getting a reputation. And we’ve had from our competitors a lot of interest in this program. It’s an absolute winner. That’s probably the number one reason [our planner numbers have gone up],” Williams said.

Securitor, which put on 40 financial planners during the year until March, moved up to 10th place in the total number of financial planners from 12th place last year.

Count Financial managed to maintain its third-place ranking in this year’s survey despite losing 56 financial planners during the year.

ABN Amro Morgans and GWM Adviser Services also managed to hold on to their rankings at eighth and ninth place, despite losing 10 and 16 financial planners, respectively, during the year.

Shrinking dealer groups

However, some dealer groups are keen to start recruiting again after losing financial planners earlier in the year.

The financial planning division of the Commonwealth Bank dropped to fifth place in the top 10 rankings of total financial planners, one ranking below last year’s result, losing 88 advisers during the year to settle at 682 at the end of March.

The group declined in size as a result of natural attrition and a freeze on its recruitment of financial planners during the year, according to Tim Gunning, general manager of Commonwealth Financial Planning.

“One of the things that we were particularly proud of over the last 12 months was the fact that … there were no redundancies of financial planners or shutting down channels,” he said.

“The reason our adviser numbers dropped was simply because for a period of three months we stopped recruiting,” he explained.

However, Gunning said the group wanted to start recruiting once again.

“This year we’re certainly looking to continue to grow our adviser numbers. We’re pleased about the opportunity we’ve been able to provide in terms of … referrals to ... our existing advisers and we think there’s capacity to increase adviser numbers given the scale of the opportunity.”