A $20.25 million takeover bid for Matrix Planning Solutions by ClearView Wealth is the latest piece of merger and acquisition activity in the non-aligned financial planning space to underline the sector’s emergence as a genuine and robust alternative to institutionally owned financial planning licensees.
Through a merger implementation deed, ClearView will offer Matrix shareholders $7.75 million in cash and 15.432 million shares. At ClearView’s volume-weighted 90-day average share price of 81c a share, the scrip component of the bid is worth about $12.5 million.
Matrix shareholders accounting for about 17.5 per cent of the company’s issued capital have already entered into pre-bid acceptance deeds and the Matrix board has recommended shareholders accept the offer in the absence of higher bid.
A successful transaction will create a merged entity with 200 financial planners, funds under management and advice of about $6.9 billion and $148 million of annual premiums.
Read Professional Planner’s interview series with leading non-aligned advice groups:
Part 1: The future in focus as non-aligned groups exploit the growing gap with institutions
Part 2: Unity of purpose as non-aligned groups bulk up to compete
Part 3: Proof of non-aligned business model emerging in Centrepoint performance
All about quality
The managing director of ClearView, Simon Swanson (pictured), says the company is aware of other recent M&A activity, and has observed the pressure being brought to bear on the non-aligned sector by vertically integrated institutional players, but the bid for Matrix is not a direct response.
“It’s about the quality of what we are trying to achieve,” he says.
“We’ve seen a lot of proposals for acquisitions, but the Matrix one is a merger of like cultural organisations. I know that sounds all touchy-feely, but you would never want to blow up your dealer group by giving poor advice.”
Swanson says there is “a very large space in the provision of integrated life insurance and wealth management advice” in Australia.
“What we’ve done in the last couple of years is build a life business; we have launched a life direct business that’s going well; and we’re about … to launch our own platform, and we will launch that before Christmas,” he says.
Non-aligned attraction
Swanson says non-aligned advice businesses are clearly attractive places to work for advisers who want the flexibility and independence to provide genuinely independent advice.
“In our business, at least, we understand advice, and the importance of advice, and the importance of independent advice,” he says.
Swanson says a vertically integrated structure per se is not an impediment to that, and while ClearView is structurally vertically integrated, “attitudinally we are not”.
“Every life insurance company is on our approved product list,” he says.
“We ask no one for rebates. We ask no one for shelf space fees. We ask no one for sponsorships.”
Separate brands
Matrix and ClearView will continue to operate as separate brands in the advice space. If the merger proceeds, the current chairman of Matrix, Pieter Franzen, will become chairman of the merged Matrix and ClearView advice businesses, replacing Bruce Edwards, who will remain on the ClearView main board. Gary Weiss remains non-executive chairman of the ClearView group.
Other recent activity in the non-aligned space has included a takeover bid by Australian Unity for Premium Wealth Management; Infocus Wealth Management buying back the 25 per cent of its shares previously held by MLC and announcing a merger with Patron Financial Services; and Fortum Financial Group buying back a stake in the business that was owned by ANZ.
Robust alternatives
In each case the moves were underpinned by a desire to stand aside form institutional ownership and to develop a value proposition that stands up as a viable and robust alternative for financial planners disillusioned with the institutional model.
And it comes at a time when the four major banks and AMP are seeking to rapidly upgrade the quality and the educational standards of their financial planners in the wake of scandals at both Commonwealth Financial Planning (CFPL) and Macquarie Private Wealth, which has prompted renewed focus from the regulators and government alike on the quality of financial advice in Australia generally.
