Perhaps the next challenge Wealthsure and Sentry Group must face is articulating a clear value proposition for its clients and advisers, both existing and prospective.
The entity that emerges from the deal between Wealthsure and Sentry Group, which was formally announced last week, will rank among the top three non-aligned businesses in terms of adviser numbers.
Wealthsure will eventually fall under the same Australian Financial Services license as Sentry, but it will initially be retained as a separate licensee. Sentry is the holding entity and Wealthsure is a wholly-owned subsidiary, with the overall group having more than 300 authorised representatives.
“We’ve taken on the new license, with all the authorised representatives. We’ve promised the advisers that they won’t be any worse off,” says Murray Hills, chairman and director of Sentry Group.
“The brand will stay and we’ll just see that goes over the next two or three years.”
Hills expects they will retire the Wealthsure license after this time.
“We will probably rebrand, but not straight away,” he says.
Wealthsure is the latest in a round of acquisitions Sentry has made in recent years. It absorbed Australian Finance Group in 2009, which became Sentry Financial Planning. The group also includes Sentry Wealth Management, previously Epic Adviser Solutions, which was purchased in 2007, and Sentry Financial Services.
“We’ll bring [the Wealthsure advisers] across with the least amount of change possible, so we leave them inside those licenses. It’s not overly more expensive to run multiple licenses,” Hills says.
David Newman, managing director of Wealthsure and now an executive director of Sentry Group, says he sees significant opportunities in the non-aligned sector.
“Having a presence in terms of network and a record of capability allows us to take advantage of some of those and go to the market with a very credible alternative to some of the practices that may be in institutional models, and that are looking for a different or non-aligned solution,” Newman says.
Positioning unclear
What remains unclear is exactly how the new group will position itself. Both Newman and Hills say they see huge opportunities within the non-aligned space. The very public struggles of bank-owned financial planning dealer groups amid inquiries from the Australian Securitities and the Senate are perhaps one reason non-aligned AFS licensees may look particularly attractive now.
However, simply distinguishing themselves from banks may not be enough.
“It’s not about mergers for mergers’ sake, technology for technology’s sake, or about institutions versus non-institutional. For all of them…it’s about ‘why am I going to come to you?’” says Tony McDonald, co-founder and director of T&C Consulting.
He says much of the work T&C currently does is about helping practice owners and licensees think through those issues.
“There’s not a huge mount of merger and acquisition activity out there because there’s a dearth of sellers,” he says.
“But there’s a lot of questioning about ‘what do I stand for?’ and at all levels.”
Most of the licensee representatives Professional Planner speaks to, at all levels, are falling over themselves to outline what they do and how it differs from their competitors. Almost invariably, those who position themselves best are all about building, defining and communicating their culture.
Culture is touched on only very briefly in the joint statement released by Hills and Newman last week, which mentions “the combined synergy and compatibility of our respective corporate cultures.”
Emerging from an EU
News of the deal first surfaced in March, though a formal announcement was delayed due to ongoing discussions between Wealthsure and ASIC. These talks surrounded changes to the terms of the enforceable undertaking brought against Wealthsure in 2011.
Newman explains the EU was around system control. “The fallout of that was we had a number of advisers that didn’t fit, we had to work through issues to move those on. That cleanup has occurred.”
From a peak of around 400 advisers, the group let go more than 100 advisers. “Just economically it didn’t make sense for a lot of them to be there. And you correlate them back to the compliance risk, it didn’t make any business sense,” Newman says.
“We were able to present the business in a much tidier fashion. The EU was a catalyst for reforming the business. We get an additional advantage that Sentry have got some very strong internal compliance procedures,” Newman says.
The new business also gains a stronger presence on the east coast of Australia than Wealthsure had alone, with around 70 advisers across Victoria, New South Wales and a sole planner in Darwin.
