Strength In Numbers

By the end of June, 2011, Steve Walpole aims to have moved his financial planning business to 100 per cent fee-only advice. Not one cent will come from investment products. It won’t have been an easy journey, and that date is still almost two years away. But Walpole believes he’s got the right philosophy to get there, and a business plan to match.

But Keystone is also part of a network of some 10 independent licensees who have clubbed together to form a buying group, with the aim of passing on substantial savings to clients, and weaning the firm - all of the firms in the network - off product-related income.

Keystone has made a promising start. Walpole says that from a split of roughly 50/50 between fee- for-service and asset- or portfolio-linked fees not long ago, by June 30, 2010, it will only receive 15 per cent of its income from portfolio-based fees.

That final 15 per cent may prove to be the most difficult, however, as Keystone and the buying group grapple with pricing issues in wrap services, and how to deal with clients who are reluctant (or unable) to pay a fee from their own pockets for the advice provided.

Walpole’s journey started in the early 1990s when he joined insurance company Legal & General.

“I started there in group risk insurance, under an actuary, with a team [including] a couple of guys who did maths and finance, so they did massive spreadsheets on group risk analysis,” Walpole says.

“I moved around fairly quickly. I worked in the NSW business development office, compliance and training - three jobs in four years.

“I joined when things were just getting serious about making sure we had product manuals, and people actually got examined – they had to pass exams to sell those products.

“Before that, they used to come in and they’d just sign in on the [attendance] sheet and say they’d been there, walk back out and sell all these products that they didn’t really know about, apart from what was in the PDS [product disclosure statement], or whatever it was called back then.

“They got really tough on compliance; they were changing distribution at that time. And so I sat down and said product-based advisers might have a run for the next five to eight years, if you’re lucky. It could be longer, it could be less, and it’s turned out longer - it’s surprised me. The power of institutions.

“I said to myself, if I’m going to go out to join an advisory firm, I’m going to join one that can stand the test of time.”

The desire to join an advisory firm at all was driven by a couple of factors, first among them the experience of Walpole’s father.

“Seeing my father working in executive management at Woolworths, and the pressures of that type of management structure,” Walpole says.