Portfolio Planning Solutions’ (PPS’) acquisition drive, which in recent months has seen it grow by $130 million in funds under advice, has resulted in its largest single acquisition yet following the integration of Adelaide-based financial planning practice Wealth Concepts.
Wealth Concepts brings with it $100 million in funds under advice (FUA), taking PPS’ total FUA to about $750 million. Another acquisition, which is set to be signed in the coming weeks, will take it to $1 billion in FUA.
PPS’ strong acquisition drive was rooted in concerns around succession and continuity, which led to an agreement with ipac.
“We had our own succession issues within the practice,” PPS executive chairman Lou Delfos said. “Our solution back in 2006 was to actually form an equity partnership with ipac. Our principal, John Burkett, was concerned about how he was going to honour the commitments he made to his clients. Ipac provided the solution to him as a shareholder — all he had to work on was the solution to his clients and not making that solution dependent on one adviser principal.
“Ipac was clearly the organisation that understood succession, not only from a shareholder financial perspective, but [also] from a business perspective in what you need to fully corporatise your business. Thirdly it allowed us to build a model that continues the care that the clients expected from particularly long-term advisers.”
Burkett officially retired in January and since then PPS has integrated two additional businesses and bought two client books.
“We have integrated two additional businesses since January, which also have succession issues, using the same principles we used for our founder,” Delfos said. “And that’s been successful in terms of acquisitions. We’ve been actively pursuing outside people who are very concerned about the continuation of client service.”
Wealth Concepts’ principal Gerry O’Brien said he was worried about what would happen to his clients should he retire or be forced to do so due to unavoidable circumstances.
“I was a bit concerned that there was a real business risk with just me in the business as it was too dependent on me as the major principal, but I was very concerned about my clients. If there were any issues with me, my clients would have been left out on a limb,” O’Brien said.
He felt that by joining a larger corporatised financial planning firm, his clients would have a certainty of continuity and good service. He is staying on with PPS on a part-time basis, with the main objective of transitioning the clients across to PPS.
“I’m very comfortable with it all,” O’Brien said. “I’ve met all the advisers and [I’m] impressed with their integrity and knowledge, and I’m sure my clients are going to a good home.
“I think the corporatised model is the way of the future, and smaller businesses are going to find it increasingly difficult with compliance requirements and the technological issues. It certainly has proven better than selling to a smaller adviser.”
