The father-son directors of Adelaide practice Planning for Prosperity, Bob and Daniel Budreika, decided just two years after launching that their institutional AFS licensee didn’t provide the flexibility they wanted.
“When we were coming up with our own way of running the business, from a clean slate, we worked out ‘hang on, we want to release the shackles and work for our clients’ best interest.’
“But looking from an institutional dealer group perspective, they’re quite restrictive in what you can and can’t do,” Budreika says, referring particularly to the approved product list. Really, it just comes down to them wanting to feather their own nest with their own products. You can’t really veer too much outside of that APL,” says the younger of the duo, Daniel Budreika.
In 2010, he and his father made the decision to move from Westpac’s Securitor to a non-aligned AFS licensee, realising their existing arrangement was stifling their desire to be more nimble. “There were things that we’d request, but when the licensee’s so big, it’s like turning the titanic around.”
“We were thinking ‘everyone’s gone to fee-for-service, we’d really like to go with a dealer group that we pay a fee to, not a percentage of our revenue,” Budreika explains.
After around 18 months of research, they settled on Melbourne-based AFS licensee, Gold Financial.
While they see Gold as a good fit for their business, providing the right balance of oversight and flexibility, Budreika suggests they may consider self-licensing at some point in the future.
However, he says they are realistic about the work this involves and are in no rush to take this step. “Because we’re such a small business, with limited human resources and time, we’re better off outsourcing a lot of that administration now, but if we do grow, it probably would make more sense to go down that path and write our own destiny.”
Six years after its 2008 launch, the boutique business has grown steadily and built up a book of around 60 loyal clients.
Light bulb moment
Its origins stem from Daniel’s father and co-director of the business, Bob, who owned another financial planning practice, Executive Financial Services, for around 16 years before selling up in 2004.
Following this, in 2006 he launched a business focused on the delivery of reverse mortgages, which had become popular at the time.
“He started to see a real opportunity here, to use them for high net worth clients,” says the younger Budreika .
However, he soon found that getting support for the idea among financial planners was considerably harder than anticipated.
“Financial planners were somewhat arrogant in dealing with him. He realised that, strategically, [reverse mortages] could make these clients better off, but the advisers weren’t interested.”
At this point, Budreika says his father thought “bugger this. I’ve reignited a passion for delivering financial advice, I’ll do this myself.”
Daniel joined his father in the new business, moving from his role as paraplanner at medium-sized Adelaide financial planning practice, Barker Wealth Management, which held a Securitor AFS license.
“We started from scratch with nothing – no clients, no money – it was a leap of faith. We probably didn’t know what we were getting ourselves into,” he says.
Rural client base
Budreika explains they deal primarily with rural clients, mostly farmers and small business owners.
“Within those, we’ve got people of varying ages, but probably the majority of our clients are in the accumulation phase, we don’t have a lot of elderly clients.”
With a focus on strategic rather than product-led advice, he says they provide a lot of succession planning advice to farmers, and a variety of issues that come along with that.
Along with opting for a non-institutional licensee, Planning for Prosperity has adopted more tailored systems. Having had experience of using Xplan from his days at a Securitor-owned practice, Budreika says he found this wasn’t the right tool for a business of their size.
“They used Xplan, and you could see the potential, but you just about needed a fulltime staff member to customise it to do what you want it to do.
“We looked at Coin and Xplan, and our conclusion was that they probably tend to suit larger businesses,” he says.
They instead settled on Midwinter’s AdviceOS for their customer resource management and database systems. “This is quite customisable, so if we want to add a step into a process, to tweak it, I can jump in there and do that.
“We have a lot of repeatable processes that are automated, customised workflows and tasks, that split off jobs for different people to complete at a various stages,” Budreika adds.
New business challenges
While many financial planning businesses rely heavily on referral partnerships with accountants and mortgage brokers for client leads, Budreika says this hasn’t yielded excellent results for them so far.
“We’ve tried to set up referral partnerships with accountants and other centres of influence, but without much success as yet.
“We have great relationships with accountants, but perhaps they’ve seen us as just another investment adviser, but that’s not how we see ourselves, we’re more strategically focused,” he says.
Instead, they source new clients by staying close to their local community and leveraging Budreika senior’s network of contacts.
“You start talking to one person, and then it’s really just about pounding the pavement,” Budreika says.
“Things haven’t just come to us, we’ve had to really work to find that new business, probing and asking lots of questions, and trying to get in front of as many people as we can.”