An inevitable refrain from industry sources is that measuring dealer productivity by movements in adviser numbers is simply a meaningless measure.
While nobody would go on the record, it’s safe to say the emergence of independently owned Professional Investment Services (PIS) as the nation’s largest dealer group in 2005-06 prompted a spike in queries on our underlying methodology this year.
PIS added a standout 135 advisers to a total of 1,329 in 2005-06, leapfrogging 2004-05 Top 100 winner AMP Financial Planning (AMPFP), which fell by 21 advisers to 1,259 to claim second place in 2005-06.
This achievement did in itself raise suggestions by some dealer heads of a “growth at any price” strategy by PIS, and that a “lot of its listed advisers are part-time planners and accountants”.
But, for the most part, PIS’ detractors point to the survey’s funds under management (FUM) table to suggest its productivity per adviser is not high, and that it would not consequently poll highly on any top 100 survey based on a methodology other than adviser numbers.
One unfavourable comparison made is that PIS, with its 1,329 advisers, has FUM of only $12 billion, while AMPFP, with 1,259 advisers, has $34 billion under advice.
Critics also compare PIS with fourth-placed group Commonwealth Financial Planning, with 625 advisers and $24.9 billion under advice in this year’s survey.
Count Financial, the third largest dealer group in the 2005-06 survey, has 892 authorised representatives and $10.1 billion under advice, but the group is widely considered to be “certainly more productive” than PIS, as one source put it.
This is notwithstanding that sources acknowledge that PIS and Count (and seventh placed Millennium3 Financial Services) advisers write a lot of risk insurance business, which doesn’t result in FUM.
PIS managing director Robbie Bennetts hit back at potential detractors of its adviser to FUM ratio, questioning the authenticity of the FUM posted in the survey by some of the top 10 institutionally-owned groups.
“You simply don’t know what the institutionally-owned groups, such as AMPFP, are accounting for under the FUM table.
“Is it just their planners? Because they have product of their own, which could make for a very different survey story.”
Bennetts adds that while PIS may “lead the world in growth in numbers”, the group has been “strong enough in its own right to stand up to formidable market changes over the past few years”.
“As we all know, there has been much consolidation in our industry recently, and PIS is last of the larger dealer groups with what can safely be called ‘independent ownership’.”
Count Financial managing director Barry Lambert also weighed into the debate.
“Someone with a low FUM can actually give far better service and better advice than someone with a higher amount.
“Groups with high FUA per adviser always equate this with the quality of their advice, but I think the FUM per adviser has nothing to do with quality of advice, but rather how they promote and sell themselves,” he says.
