When Securitor’s planners gather in Darwin this month for their 2009 national convention, it will be against a backdrop of global financial turmoil and market dislocation the likes of which many planners have never experienced before. And Securitor has some history to draw on. It was set up more than two decades ago by two pioneers of the financial planning and platform industries, Graeme Morgan and Bill Healy – two Perth-based entrepreneurs who, in their personally understated way, revolutionised the business.
Securitor found its way into its current ownership structure when St George, bought Sealcorp for $272 million in late 1997. St George itself was subsequently acquired by Westpac. Securitor was the key financial planning asset of Sealcorp, a holding company that also owned the Asgard platform and, initially, the Assirt managed funds research business (which was acquired by Standard & Poor’s). Securitor has survived changes of ownership and management, sharemarket collapses, recessions and all manner of financial planning industry upheavals. Even so, current market conditions are as severe as any the business has previously experienced.
It’s currently a stressful time to be a financial planner, with clients’ expectations not always being met, and things not panning out exactly as anticipated. So the “community” aspect of the planning group’s conference will be all the more valuable in helping Securitor’s advisers understand that they’re not alone in the issues they face. Neil Younger, head of Securitor, says a chance to meet and compare notes with a cohort experiencing the same stresses and strains – and the same satisfactions and successes – can have important benefits not only for a planning business, but for the planners’ peace of mind as well.
“The financial planning community has been impacted significantly by the economic downturn,” Younger says. “There are people who have been dealing with clients for 20-plus years…who now feel as though they – the clients – cannot realise their goals they had in place because at the eleventh hour the market has pulled the rug from under them. “Planners take those conversations to heart. If you’re having the same conversation time and time again, it can be quite a challenge for planners.” Younger says the convention has attracted about the same number of attendees this year as last year – a fine result when one considers that attendees pay their own way there.
“Our advisers pay to attend, and in paying they have to do so out of what has been compressed revenue lines for them,” Younger says. A large number of partners and other family members also make the trip to the convention each year, and also pay their own way. The theme of the convention this year is “Make Your Own history”. It was a theme set more than 12 months ago, and is highly appropriate to the environment planners operate in today.
“Here’s an opportunity to stop, reset and think about what the future looks like,” Younger says. “If you look at advice and at advice businesses, what changes to their businesses will be required as a result of the environment that they now find themselves in? “Does their offer need to change? Do the services they offer…need to adjust, and what does all that mean in terms of an opportunity to make their own history?” If history truly is written by the victors, as the saying goes, then the implied message to planners in the Securitor network is that if they want to write their own history, they’re going to have to emerge from the current downturn as winners.
Younger says the key to success will be recognising the breadth and depth of services that clients need from this point forward – and that those services may be very different to those they have needed in the past. But defining a service proposition is only the first step, Younger says. If a business is not structured correctly to deliver that range of services, it will ultimately fail. “It’s about structuring a business to deliver on the advice requirements of the Australian public into the future,” Younger says. “‘Advice’ is such a broad term. What is the value proposition that planners want to take to their clients? Their value proposition, in certain areas of the industry, has been challenged in recent times.”
Younger says a classic example is the planner who holds out his or her expertise as being able to pick the best-performing asset classes or managed funds. That claim may have been made to look foolish over the past 12 months. “But if your value proposition is broader than that, is your business structured to be able to deliver that?” he says. “What do you want to take to your existing clients, and what do you want to take to new clients? “Ultimately, being independent planning businesses, they have [their own view of ] the value they can deliver to their clients.
What we do is challenge and guide their thinking as to how broad or specialist that should be. “We have a view that advice should be holistic in its nature; the reality is that your business structure needs to be large enough, but with enough specialist capability within it, to be able to cater to a broad range of needs for advice.” Younger says there’s a clear commercial benefit in the practices in a planning network coming together to share ideas and learn from each other. Quite simply, it increases the value of those practices. “It does make sense to have a market to potentially sell their business into,” Younger says.
“One of the detractors of value is the transition of your business into that other business.” But if those businesses have similar systems, philosophies and ways of doing things, that transition may be much smoother, when the time comes. “And in a network like Securitor, where businesses are often sold into other [Securitor] businesses, it makes commercial sense.” There are 290 practices, and 460 advisers, in the Securitor network, and a further 68 licensees and 360 advisers under the group’s Licensee Select wing. (Younger also oversees Magnitude, a business that supports former Westpac-employed financial planners who have moved out of the bank and obtained their own Australian Financial Services Licences (AFSLs).)
“For some [planners], the Securitor model isn’t the right way for them to take their business,” Younger says. In these cases, Securitor provides support services to the practices, but leaves them to set and plot their own strategic course. Their practices are also structured differently: because each Licensee Select advice practice has its own AFSL, the risk associated with giving advice resides with the individual licensees. “We manage risk in a different way,” Younger says. “[Securitor] planners get corporate ownership of risk, which you don’t get if you have your own licence.
“The other thing they get is they’re part of this brand identity. So they get a sense that from a compliance perspective – because we own the liability in the Securitor business – that there’s a standard test applied across those practices, so the name does not find its way onto the front page for the wrong reasons.” Younger says the philosophy applied by Securitor to supporting its advisers is to simply equip them to provide to their clients the kind of solutions their clients need.
That philosophy dates back to the early days, when Asgard was developed to give planners “a more efficient way to interact with product providers”, Younger says, and Assirt was set up to provide detailed research into managed funds. In other words: advice comes before product. “Securitor genuinely tries to deliver things that planners need to be successful in giving advice to their clients,” Younger says.
“So, similar to that heritage piece, today we deliver things off the same sort of protocol: What do you need today? What does your business need to make it more efficient? We resource, we invest and we provide support to our planners to be able to provide that.” A case in point is Securitor’s “Passport to Profit” program. It’s made up of elements of an existing program, called Business Torque, that have been pulled together to form a program tailored to address a current need. The roll-out of Passport to Profit has been via Securitor’s professional development (PD) days, and so far about 50 per cent of Securitor’s planners have signed up.
The first phase of the program is an assessment or filtering stage, designed to pinpoint what support or work a particular practice needs. Younger says some practices will come through that stage and discover there’s nothing significant that they need to do. But for those who do need to work out what services they have to be able to offer to clients, and to structure their practices accordingly, the program will deliver a tailored range of support services. How long it takes a practice to complete the program depends both on how quickly the practice wants to move, and on how much work needs to be done. After two PD days, there were 300 individual workshop registrations – so clearly the timing of the program was right, Younger says.
“You have to challenge your current value proposition,” he says. “The market has changed. You may need some advice and guidance around your business structure, charging mechanisms, et cetera. [Acting now] is going to stand you in good stead. “It used to be: ‘Where do we find the next planner?’, because there was a queue outside the door of people looking for advice. “But now, for many [planning firms], they don’t have any choice but to make the changes we were talking to them about two years ago.”
