Financial planning and wealth management for high net-worth individuals (HNWIs) is a central element of a three-year, $70-million program announced today designed to slash $50 million a year from listed-wealth manager Perpetual’s cost base and position it for growth by the start of the 2015 financial year.
Perpetual Private is one of three businesses that Perpetual will focus on as it rationalises and restructures its operations. The others are asset management and a simplified corporate-fiduciary business.
Perpetual currently has 11 separate businesses, serviced by multiple and overlapping corporate centres, supported by more than 3000 separate IT applications.
The chief executive officer and managing director of Perpetual, Geoff Lloyd, says the Transformation 2015 program cost savings are in addition to those that will flow from already announced initiatives.
The Perpetual Private strategy consolidates and builds on a strategy set out by Lloyd in April 2011 when he was head of Perpetual Private, before being appointed chief executive and managing director.
“In this review, that was picked up and accelerated,” Lloyd told Professional Planner Online.
“It is a further commitment to the ‘path to growth’ as it was called when it was launched… and some acceleration of those activities, particularly changes that we’re doing to the corporate infrastructure of the business.”
Perpetually wealthy
Perpetual Private will focus on three market segments: business owners, the established wealthy and professionals. It will service these segments through its existing business and through its Fordham and Grosvenor acquisitions. Lloyd says the restructuring will ultimately strengthen the company’s balance sheet and enable it to improve its ability to expand via further acquisitions.
Perpetual’s research suggests the business-owner segment represents about 30 per cent of the total high net-worth (HNW) market in Australia, with investable assets of between $150 billion and $200 billion.
The established wealthy segment accounts for about 25 per cent of the HNW market, with investable assets of between $120 billion and $170 billion.
And, last but not least, the professionals segment represents about 20 per cent of the HNW market, with investable assets of between $100 billion and $150 billion.
Perpetual says each of these segments is growing at between 7 per cent and 11 per cent a year.
Lloyd says there are two main subsets of professionals that Perpetual will target – medical specialists and barristers – and that it will target 14 out of 55 categories of medical specialisation that it has identified.
“We think the source of your wealth best drives your needs and preferences as a client, and that’s what drives our ability to put our skills and capabilities against your needs,” he says.
“There’s no point talking to a business owner unless you’re giving them tax and accounting.
“We think that’s a big differentiation in for us, in all of those categories, and of course… the breadth of our offering in philanthropy, not-for-profit and fiduciary, which most of our competitors do not have.
The Perpetual point of difference
“I think a point of significant differentiation for Perpetual across all of its businesses is that we are a large, independent boutique
“When it comes to advice, advocacy and scale, we’ve certainly got it. And investment that is unrivalled in scale. But when you add all those together, that’s what creates greater power than any individual [one] of those.”
In a presentation to analysts yesterday, Lloyd said Perpetual Private achieved a 72-per-cent increase in new life-risk business in the nine months to March 31, 2012, along with a 36-per-cent increase in advice fees and a 100-per-cent improvement in new leads from alliance partners.
In May Perpetual announced that the general manager of BT’s bank distribution and insurance division, Mark Smith, had been appointed head of Perpetual Private.
Smith was appointed general manager of insurance for BT in late 2008 after the company merged with the wealth business of St George – both owned by Westpac. In 2011 his responsibilities were expanded to include the distribution of BT’s products to Westpac customers.
At the time, the company said that Smith would “serve out his six-month notice period and continue to lead the bank distribution and insurance (BD&I) business as general manager until the end of November”.
“There are some major programs of work underway in BD&I and Mark is absolutely committed to seeing through as much as he can over the next six months. Over that time, we are working through the best options for his replacement,” it said.
