While political leaders came and went and further regulation rumbled through, it seemed the financial planning sector spent the last 12 months in a holding pattern with minimal growth, some startling losses and the reinforcing of entrenched positions. Jason Spits reports on the details of this year’s Top 100.
The movers and the shaken
The Top 100 Dealer Group survey can be considered an annual barometer of what has happened in the financial planning sector over the previous 12 months.
Questions abound as to the ‘why’, but the ‘what’ is usually clear from the data. And there are some clear winners in the area of growing adviser numbers in a tough regulatory and business environment.
Overall planner growth was relatively low, with only 793 planners joining the Top 100 dealer groups since 2012. Charter Financial Planning ranks highest as the group that added the most planners in the last year.
The group added nearly 300 to have 779 planners in its books, pushing it from ninth-placed group in 2012 to second-placed group in 2013 – due to the transition of AXA Financial Planning-branded advisers to the Charter licence.
While this growth is impressive, Ord Minnett, ipac Securities and Magnitude more than doubled their planner numbers, adding numbers well in excess of those with which they started the year (see Table 1).
Dover Financial Advisers also posted significant growth, adding 91 planners to reach 227, while Guardian Advice added 68 planners to move to 208. AMP Financial Planning held its spot as the largest planning group in the country with 1680 planners, but added only 47 planners over the past 12 months.
At the opposite end of the table there were some significant decreases. Professional Investment Services (PIS) shed 307 planners, dropping from 866 to 559.
However, it was not alone as a large-scale planning businesses that lost planners, with nine of the 10 firms that lost the most planners also among the industry’s largest planning groups (see Table 2).
PIS stands alone as the only non-institutionally aligned group among these 10, which included three Commonwealth Bank-owned groups (Count Financial, Financial Wisdom and Commonwealth Financial Planning) and two ANZ-owned groups (Millennium 3 Financial Services and RI Advice Group) reporting declines in planner numbers.
Perpetual Private Clients, NAB Financial Planning, Genesys Wealth Advisers (AMP-owned) and St George Financial Planning (BT-owned) were the other institutionally aligned groups that rounded out this group of 10.
Despite these shifts, the top 10 groups ranked by planner numbers would be familiar to anyone looking at last year’s table: the names have stayed constant while only the rankings have shifted. The top 20 by planner numbers would also look familiar – only three groups in the top 20 sat outside it one year ago.
Face to face
More important for the long-term future of financial planning is the number of people receiving advice. According to data collected from those planning groups willing to provide this number (which was just over one-third of Top 100 respondents), about 1.8 million Australians are clients of financial planners within the Top 100.
Given the notable absence of data in this area relating to some of the larger groups, it is likely that this figure is much higher and is probably around four million, reflecting statistics that state one in five Australians receive some form of financial planning advice.
While PIS has the most reported clients at 283,000, which averages out at 327 clients per planner, it is well below the client-per-planner number for SMF Wealth Management which has 11 planners and 36,000 reported clients (an average of 3272 clients per planner) and Wealth Managers which has 18 planners and 39,000 clients (an average of 1625 clients per planner).
Interesting to note is that only half of Top 100 respondents were able or willing to supply numbers indicating how many of their planners were members of the Financial Planning Association (FPA) or held the Certified Financial Planner (CFP) designation.
According to the data gathered there are 3013 FPA members in the Top 100 and 2215 CFPs. AMP Financial Planning has the highest levels of each – 623 FPA members and 416 CFPs.
What’s it worth?
It seems that while financial planners are often willing to talk about their clients’ money, they seem to be reticent about discussing their own, with only about two-thirds of planning groups reporting their Funds Under Advice (FUA) figures.
Of those who did it was logical that the large institutionally aligned groups should report high levels of FUA to match their large planner numbers (see Table 3).
However, when FUA is compared to planner numbers the situation changes markedly, and private client planning groups pull well ahead of their peers.
Perpetual Private Clients, Macquarie Private Wealth and Ord Minnett boast funds under advice per planner in the $100 million vicinity. This compares with $28 million per planner at AMP Financial Planning, the top-ranked group by planners and funds under advice.
At the same time it appears that smaller niche business are better able to attract and service the high net worth clients whom much of the industry seeks.
Planning groups with well below 100 planners have funds under advice per client in the hundreds of thousands of dollars region: Dixon Advisory averages $1 million per client while reporting 63 planners, while Sydney-based Principal Edge Financial Services and Toowoomba-based Byron Capital Private Investors, with only eight planners each, can boast similar FUA per client.
Behind the scenes
The back-office numbers also reveal a few providers holding a large proportion of market share in the areas of professional indemnity (PI) insurance, financial planning software and managed funds research.
Interestingly, the single biggest group – about a quarter of the Top 100 planners represented under PI insurance (4683 planners) – are those who are self-insured via their licensee. While this may lead to thoughts of planners turning away from PI insurers and brokers, closer inspection shows these numbers are all drawn from institutionally owned planner groups, three of which sit in the top 10 by planner numbers.
CGU (2655 insured planners), Axis (2422) and Vero (2178) insure a further 40 per cent of the Top 100 planners, with the Chubb, Lloyds, AON, Marsh and AIG/Chartis insuring a further 2790 planners.
Similar weightings exist around software. Established providers Xplan and Coin dominate in the investments and risk/insurance space. Xplan is used by about 50 per cent of Top 100 planners (investments – 8246 planners, risk – 7933) while Coin is used by about a third of planners (investments – 5362, risk – 4126).
AdviserNETgain has held its ground with 504 users in both areas but is on offer only to planners within the St George and Securitor networks.
Midwinter records 409 planners as users, but a number of respondents indicated it was used alongside other software. This added more than another 600 users to those numbers for a total of nearly 1100 users within the Top 100.
Among research providers, Morningstar has more than one-third of planners as users (6130) while Lonsec and van Eyk have about one-fifth to one-quarter of planners as users (4409 and 3690 respectively).
These numbers can overlook the fact that many planning groups and planners have access to and make use of a number of software and research providers. This is evidenced by only 147 planners reporting they use van Eyk research exclusively. However, a further 3500 planners use it alongside other research providers, according to in-depth data gathered by Money Management while producing the Top 100.
Time in the market
Industry change often focuses on what passes away and what rises up to take its place, but the Top 100 also hosts more than 20 planning groups who were founded when hair was fluffy, shoulders were padded and pastel colours moved into the wardrobes of many men – the ‘80s.
Perpetual Private Clients and Shadforth Financial Group trace founding dates back over one hundred years, due to a heritage of long-standing trustee and accountancy practices.
However Godfrey Pembroke (GPL), Garvan Financial Planning and Count Financial, founded in 1981, continue as the longest-running groups set up specifically as financial planning businesses. While they have endured, they have also seen changes, shifting from independently-owned status to being owned by NAB (GPL and Garvan) and Commonwealth Bank (Count Financial).
Other notable ‘80s-launched groups that continue today include ipac Securities (1983), Bridges (1985), Securitor (1986), Financial Wisdom (1986) and Hillross (1987), all of them now institutionally owned.
Please contact Money Management on 1300 360 126 to purchase the extended Top 100 Dealer Group table.
