At 60 years of age, Hobart-based planner Rod Scurrah knows he’s closer to the end of his career than to the beginning of it. After 35 years in the finance industry, he knows for a fact that he will not still be working in the firm he co-founded in another 35 years’ time; but now he’s pretty confident that at least the firm will still be in business – and that it will be in good hands. On May 5 this year, a new name, Aequis, sprang onto the financial planning scene. Aequis is the business created by the merger of Scurrah’s firm, Davey & Scurrah, with another Hobart firm, Ritchie & Associates.
The merger is designed to give the business the scale to achieve the “corporatisation” it needs to transcend its founding partners. Scale will also give the business the resources it needs to put in place a structure that will change the way it relates to clients. Most obviously, none of the principals’ names are on the door any longer. That wasn’t a decision any of them made lightly, but Scurrah says they understand that for the business to continue to thrive after its founders have moved on, new clients need to have a relationship with the firm itself, rather than with specific individuals.
The debate over “people versus process” is as relevant in financial planning as it is in funds management. Apart from the pragmatic aspects of the restructuring – “and clearly one of them is succession planning”, Scurrah says – setting the business up to continue well into the future is also about leaving something behind. “Very much so, the legacy element,” Scurrah says. “I am in love with it.” The restructuring is about fostering and maintaining “very strong relationships with two of the key stakeholders”. “One is the clients; we have very strong relationships with clients,” Scurrah says.
“And the second one is very good relationships with the people who work for us. “We want to take this business beyond its principals; we want our clients to have alignment with the business, not the individuals, so they are not adviser-dependent, they are business-dependent. So I think it was a step in that process. “It’s all about ‘corporatisation’ – in the good sense of the word.”
The paths of Rod Scurrah and Professional Planner first crossed more than a decade and a half ago, on a Lend Lease-sponsored roadshow that took in five Australian capital cities in the space of a week. Professional Planner didn’t exist then, obviously, but during a series of “hypothetical” panel discussions, moderated by Huw Evans, the then-head of the Australian Lifewriters Association (a forerunner to today’s Association of Financial Advisers) and the journalist became reasonably well acquainted with each other’s views on issues like standards in financial planning, commissions and disclosure. From the Professional Planner side of the fence there grew a healthy respect for Scurrah and his opinions (and his stamina).
That respect proved to be well-founded. Since 1992 Scurrah has transformed his Hobart-based business from one that was focused on life insurance, transactions and generating commissions, to one that is a leading light in the planning industry’s moves towards professionalism, transparency and fostering strong long-term client relationships. Scurrah and his partner Doug Davey have managed to transform their business, even though they operate in a relatively small market.
This meant that they could not just replace with new clients those clients who didn’t want to go with them – they had to put forward a cogent, coherent and compelling reason for changing the basis of the client/adviser relationship. But crucially, Davey and Scurrah took the necessary first steps at a time when investment markets, their business and investor confidence were buoyant. It might be a different story for the firm if it were embarking on the change process today. Scurrah can now step back, confident that the business he founded will continue to thrive and service the people of Hobart long after he’s moved on. “There are two sides to this,” Scurrah says. “On our side, the Davey & Scurrah side, we are always looking at opportunities for growth.
We’ve done that in the past by acquisition, and we’ve always been open-minded in getting extra growth and scale. “From Ian [Ritchie]’s point of view, he was aspiring to do similar things to us, in terms of process change, and he realised that to grow he needed someone to run the business for him so he could spend more time as an adviser. It’s a bit difficult to achieve that scale as a sole proprietor.”
It helped that both Davey & Scurrah and Ritchie & Associates operated in the same dealer group – it meant that on many key issues the principals were already on the same page. Even so, making sure the firms could fit together properly proved to be a time-consuming task. “We started this negotiation in January last year,” Scurrah says. “We signed heads of agreement to move forward with it in June; then it took us until the next May to get it across the line.” While the businesses were broadly aligned philosophically, Scurrah says a lot of work went into calculating “what financial value each business was bringing to the merged entity”.
“We really had a hard look into it – and we got a third party in to do that for us,” Scurrah says. Davey & Scurrah had already established a significant infrastructure to help the firm’s advisers in their jobs. “We have a general manager, we have a marketing manager, and not many businesses have those; but then it’s a matter with the combined entity of how we maximise the value of the things we have started to do and which we now have the scale to complete.” The firm has three senior advisers, three advisers and four associate advisers.
With scale comes the potential to support those individuals more effectively. It means Scurrah can focus on what he does most effectively – which is basically finding new clients, introducing them to the firm and “that kind of high-level stuff ”. It means the firm’s advisers can focus on developing technical competence and delivering the best advice solutions to clients. And it means the associate advisers can be properly developed and progress up the hierarchy. In Scurrah, Davey and Ritchie, Aequis’ emerging planners have solid mentors. Scurrah says he tells newcomers to the industry that one of the best aspects of the job is “the interaction with people”.
“The majority of the population is concerned about money and having better organised financial lives,” he says. “By developing trusted relationships we are able to help them achieve their goals. [There is an] opportunity to develop strategies within the law that produce significantly better outcomes. Every client meeting is a new case study.” But “you cannot interact with everybody”, he adds. “Some people don’t ‘get’ it, and some don’t take the advice. [There is a] need for continual client education – no matter how often we repeat the message, clients continue to be surprised when markets move against them – and convincing clients that the hard decisions are the most important decisions.”
Scurrah says his role as a senior adviser is “the conversion of new clients”. “Really, the skills that I have in communication, and in understanding people’s needs, are the old-fashioned life insurance skills of getting into people’s minds,” he says. Scurrah says that after a client has come to the firm, the senior advisers should “step out, always be here, but step back from the relationship”. The meat of the relationship should be handled by the firm’s advisers, supported by the associates, who are “paraplanners, with some customer-relations type role”. This allows the firm to “present a wider range of skills [to clients, and gives clients] some certainty that the person you are dealing with has a career path in the business and will be here in the future”, Scurrah says.
“We’ve become less of a transaction-based organisation, and [gone] deeper into understanding clients’ needs and objectives,” he says. That transformation forced Scurrah to come to a number of realisations. “One is that it’s no longer about me,” Scurrah says. “To give the level of advice that clients require, it’s a team effort, whereas back in those days it was about me. “Back in those days the focus of what I was talking to the client about and what I was rewarded for was the transaction; now it’s the advice I give, both in terms of what the relationship is about and what I am rewarded for.
Transparency is just such an important issue now, in terms of where I am, how I am rewarded, and where the organisation is. “If I went back to 1992, I would say our total focus was on getting new clients.” Scurrah says it’s interesting to note that the business went from a focus on getting new clients to an almost complete focus on servicing existing clients, but is now once again focusing on cultivating new clients, albeit this time in better balance with providing ongoing service. Scurrah says 70 per cent of the firm’s current business is managing ongoing client relationships and handling client reviews. But overwhelmingly, his focus is on making sure the business continues as he scales back his day-to-day involvement.
“There’s a number of issues that go with this,” Scurrah says. “One is the clients having a relationship with the business, rather than me. Two, part of this change is about focusing more on the client and less on us. That’s an easy thing to say, but in the end when we’re talking to clients we’re always talking about long-term returns and what we’ve really structured here is a business that will be here in 30 years’ time – because I certainly won’t be.
“It’s about making the business much less principal-dependent. It’s important that the business rewards all employees and generates profits to the owners of the business. “We have a strong determination for the longterm ownership of this business to be in the hands of its employees. And my long-term goal would be to reduce my day-to-day involvement.” {mos_fb_discuss:21}
