“They might have $7 million with us and might suit someone else’s idea of a high-net-worth person, but their mindset [isn’t that].”
Infocus’s current expansion plans are in fact Steinhardt’s second attempt to grow the business. First time around he went down the growth-by-acquisition path; he found fairly quickly, though, that it was one thing to find good administrative staff to run a financial planning practice, but it was quite another thing to find good financial planners.
“The planners were good initially but we found that over time we’d teach them, they would then set up their own business over the road and start poaching clients,” Steinhardt says.
“And despite all the legal agreements we put in place, that was very, very hard to mitigate against.”
It became clear that another approach would be needed; so he sold off the businesses he’d bought and started again. The first practice to be added to the Infocus group under what is effectively a franchise arrangement was in Bunbury, south of Perth. It was set up there simply because it was far enough away from the east coast so that clients of the former Infocus practices wouldn’t see it and wonder why Infocus was one minute closing practices and the next minute opening new ones – especially if the new ones didn’t work, either.
But the Bunbury practice blossomed. Ever the pragmatist, Steinhardt decided the next phase of expansion should be in the same area – so if Infocus staff were flying all the way to WA, they weren’t going there to service only one business.
Steinhardt says many operators of financial planning practices are great planners, but less good business managers. He says those sorts of practices are one of a few different types that work well under Infocus’s guidance and its “end to end financial planning business model”. He says Infocus’s aim is to “turn it from being a practice into a business”.
“A practice has all your key personal dependencies,” Steinhardt says.
“A business is a systems- and process-driven machine that doesn’t rely on a key individual being there. We want a business, not a practice.”
Steinhardt says his philosophy is that simply adding financial planners to a business is not necessarily the best way to grow it.
“We believe you grow your business by making the staff you have efficient and increasing their productivity,” he says.
“The thing we will do in our business system, before we get them to appoint another financial planner, is make sure the financial planner they have is working well, is very productive, [and] that they have a support team that runs the stuff behind the scenes.
“If you have a financial planner who’s doing 12 to 15 appointments with clients every single week, that’s probably two to two-and-a-half times the productivity of the average financial planner in the industry now, and their business will grow just by doing that.
“A one-planner practice should be able to do between $600,000 and $750,000 turnover comfortably before they appoint their next planner.”
Queensland remains Infocus’s strongest region, with WA neck and neck with Victoria. It has a smaller presence in NSW, but Steinhardt believes NSW is fertile ground for the business.
“We prefer to grow one state at a time,” Steinhardt says. “Next cab off the rank for us is NSW.”
Steinhardt says one of the keys to Infocus’s ability to expand is agnosticism when it comes to how to charge for financial planning services.
“One thing that gets up my nose at this point in time, with the industry moving down a fee-for-service path, is the number of people who have made decisions that the way they do business is the way everyone should do business and the only way to do business,” he says.
“That it should all be hourly rate or it should all be job rate or it should all be whatever it is – I don’t believe that’s appropriate. There are many different business models and therefore you need different charging mechanisms and structures to suit the business model.
“The number one priority is that it must be clear and certain. It must be completely transparent. It must be able to be switched off by the client at any point in time. And it should not be product-related or commission-based. The client and adviser need to be able to agree up-front on the fee.”
Otherwise, Steinhardt largely supports the changes proposed by the Future of Financial Advice (FoFA), and he says the restructuring of the Financial Planning Association of Australia (FPA) is a good step, too.
“I absolutely love it. I believe it’s the right move,” he says.
“To show you how much we believe this, about a year ago we resigned as principal members of the FPA. The letter I sent to offer our resignation wasn’t the most polite letter – I suppose [that] would be a nice way of putting it. That was done out of sheer frustration. I could not see as a principal member that we were getting good value, and I couldn’t see what the FPA clearly was providing to financial planners – and the Financial Planning Association should be about financial planners.
“I think [what] Mark Rantall, the new CEO, is doing with the FPA is great. I’ve been in this industry for 20-odd years, and this is the first time I’ve really seen someone leading the FPA [who is] driving change that’s the right thing for financial planners.
