Financial planning business Roskow Independent Advisory is planning a spinoff advice venture targeting lower-complexity clients.
The idea of a sister business grew out of a recognition the existing firm was not providing maximum value to all clients, says Neil Salkow, director, Roskow Independent Advisory.
The as-yet-unnamed venture will follow the same Roskow principles, but offer what Salkow describes as “a lower touch service offering that deals with less complicated clients.”
Roskow meets the legal definition of independence, as outlined in Section 923A of the Corporations Act, charging a fee-for-service across investment, superannuation and insurance and no asset-based fees.
“I think it’s a better way to charge, from the client’s perspective. They’re getting a more transparent fee structure,” Salkow says.
Customer profile
He explains Roskow works with more complicated clients, who tend to have a higher asset base or earn more money, which often adds to their complexity level.
“It can mean that a lot of clients who otherwise would get value from what we do, after fees, if they’re not as complicated or don’t earn as much income, our fees could actually make them go backwards,” he says.
Salkow explains Roskow takes care to help ensure clients and the business are a mutual fit, and has always been open to referring clients onto other financial planners where appropriate.
“We saw the need…there was an opportunity to capture and help that market.”
Licensing dilemma
The new business may also operate under an Australian Financial Services license that is independent of Roskow’s, though no firm decision has been made yet.
“If we do go down the route of a new license, it would be simply so we can completely separate the risk and the client books,” Salkow says. He also suggests advisers working under the Roskow model might be at a “different sort of risk level compared to those on the other model.”
Given the new business will also have its own brand – something Salkow is keeping tightly under wraps for now – two AFS licenses would help preserve the separate identities.
“It will be very consistent in its look, but it will be a different brand,” he says, but emphasises there will be a clear the relationship the two businesses. “So that if a client is working with Roskow but their circumstances do change, it’s possible there may be a referral from one business to the other.”
How to avoid cannibalising customers?
Ensuring one business doesn’t encroach on the customer base of the other will be a key issue Roskow will need to address.
“There are definitely grey areas, as far as what makes for complexity [in the clients we service], and we’re trying to blacken and whiten those lines a little bit so it’s clearer for everybody,” Salkow says.
However, he believes there are plenty of clients in need of financial advice to ensure both businesses thrive. “I see it as an abundance rather than a scarcity…I don’t think we’re ever going to be short of clients. One thing we will be short of is good advisers to serve our clients. That’s our challenge,” Salkow adds.
He is hoping the inaugural Independent Financial Adviser Association of Australia (IFAAA) Symposium, which opens today, may go some way to solving that.
