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One of Australia’s largest non-institutionally owned advice groups may soon be acquired, but the National Australia Bank (NAB) isn’t the only suitor.
Professional Investment Services (PIS) chief executive Robbie Bennetts said there are currently four groups, which he described as institutions, undertaking due diligence on the dealer group.
These discussions may result in a 100 per cent acquisition of the business, Bennetts said, although smaller equity positions are also being considered.
Despite being in the market for an owner, Bennetts said the group is “still strong enough to stand on [its] own”.
However the group does have a number of retiring advisers who are looking to exit their shareholdings, Bennetts said.
Bennetts said the changes being recommended under the various industry inquiries taking place, and as such the future structure of the industry, would influence the group’s decision.
Under the recommendations made by the Ripoll Inquiry, payments from product manufacturers to dealer groups and advisers would be phased out. This presents a financial risk for dealer groups dependent on volume rebates from fund managers for survival at a licensee level, and may force them to enter the arms of the institutions or build their own funds management offering.
Similarly, institutions are moving to broaden their aligned distribution footprint.
NAB chose not to acquire Aviva’s 23 per cent shareholding in PIS at the time of the broader acquisition, but the bank does have an option to acquire Aviva’s stake in PIS.
In the wake of the Ripoll report, NAB has announced that it is “working with PIS to explore opportunities for the future”.
Of key concern in selling part or all of the business to an institution is ensuring the sale of in-house products doesn’t take priority over meeting clients’ needs, Bennetts said.
Bennetts said the advisers he had spoken to regarding potential institutional ownership supported it, “as long as we don’t turn around and dictate where they place money”.
“With that kind of domination, the accounting firms would walk away,” Bennetts said.
But the changing industry environment is also front of mind for Bennetts.
“Our concern is that the industry is losing a lot of power at this particular time, and we’re concerned about the public being able to get access to good advice at a rate they can afford,” he said.
“We’ll be taking [that issue] into consideration before we make any decisions about where we ultimately go.”
