CoreData’s annual Licensee of the Year honours have been shared in 2015 after the methodology underpinning the analysis couldn’t separate the two top groups.

GPS Wealth and Fortnum Financial Advisers have been named as joint Licensees of the Year, reflecting the esteem in which the licensees are held by financial planners themselves; while the ANZ Bank-owned RI Advice has topped CoreData’s shadow shopping survey reflecting the experiences of customers.

CoreData principal and founder Andrew Inwood (pictured) says the LOTY analysis effectively measures whether a licensee is classified as “churn-to” – advisers want to join the licensee – or “churn-from” – advisers dissatisfied with their licensee.

“Then we did hundreds and hundreds of interviews and unpacked the drivers for those things,” Inwood says.

“There’s always the stated driver, which is autonomy; and there’s always the unstated driver, which is remuneration. And that’s really important to understand.

“The interesting bit about this is the separation, and what’s happening in the marketplace. If we look at the satisfaction drivers – people who say they’re satisfied, they’re not going anywhere, they’re very happy.

“You can see the industry [average] is kind of a six [out of 10]. It’s OK. Life’s fine.

“But there’s a bunch of people who are in the eights, well above that mark, who are really happy with their licensee and what’s happening. But there is also a whole bunch of people…where their businesses are average, because the people are unhappy and people are looking for a trigger to leave.

“None of that stuff happens rapidly, but when it does it starts to happen and snowball pretty quickly.”

Satisfaction drivers

Inwood says the things that drive satisfaction among advisers are principally “engagement – does the licensee keep me informed about what’s going on in the industry in a timely manner?”

“Tell me what’s going on; help me recruit; and keep me up to speed [training] –those are the things that are going to make [advisers] satisfied and happy,” Inwood says.

“Picking this and understanding really clearly which are the ‘churn-to’ businesses gives you a clue about the future intention of the industry; and it gives you a clue about what they’re doing differently…which is making them attractive to the industry and making the [advisers] who are much more focused on the future churn to them.”

Inwood says that overall the the big five licensees – AMP, ANZ, CBA, NAB and Westpac – are much less focused on the adviser than the smaller licensees.

“They are much more focused on product; they are much more focused on product; and the people in the industry who are good want to go somewhere where they are the stars, where they are the centre of the universe,” he says.

CBA-owned Commonwealth Financial Planning (CFPL) was the top-ranked licensee of the Big Five.

“You have to have a measure that considers the supertankers as well as the destroyers,” Inwood says.

Ray Miles, executive chairman of Fortnum, says advisers value the fact that Fortnum “genuinely works in their best interests”. The licensee topped the CoreData rankings last year as well.

“That means a number of things,” Miles says.

“We provide them with the resources they need to make their businesses more efficient; and we use the benefits of scale to their advantage.”

Still Miles’ show

Fortnum advisers own about 70 per cent of the licensee, but with 25 years of experience running dealer groups, a key aspect of the Fortnum value proposition is Miles himself.*

“But we listen to [our advisers] very closely,” Miles says

“They are on the board – there’s four advisers, myself and [Fortnum’s] chief operating officer. But at the end of the day, I have run a dealer group for 25 years.

“I see every practice twice a year we go in there with them, we ask them questions, and we listen.”

Miles says every practice in the Fortnum group joined it from another licensee. There are no start-ups in the network. He says advisers who have experienced two or three other licensees before joining Fortnum value what the licensee has t offer, and are prepared to pay for it. A typical dealer fee paid by a Fortnum practice runs to $100,000 or more – 15 per cent of the practice’s first $400,000 turnover, 10 per cent of the next $600,000, and 5 per cent of the amount above $1 million.

“We will not do a deal with anyone,” Miles says.

“Everyone in Fortnum pays the Fortnum fees.

“There’s no cheaper way of doing it. If you go into an institutional dealer group, you know you are being subsidised out of product.”

GPS wealth co-founder and managing director Grahame Eveans says the CoreData resuts are “recognition that we’re actually headed in the right direction, but also, I think that’s where the industry should be heading”.

“If you can’t take the license away, and still have a value proposition that stands on its own two feet and that advisers will pay for, I don’t think in the future you’ll have a business,” Evans says.

“This might take a few years to roll out, but I think that’s where it will go.

GPS Wealth placed third last year.

“I think this was partly because we didn’t have much market exposure, over the last 12 months, that has improved dramatically. Other advisers have said we were a likely candidate if they had decided to move.

Acceptance by advisers

Evans says the CoreData results demonstrate “acceptance by our advisers”.

“They see the value,” he says.

“There’s a certain amount of strategy that you can have, but implementation by the advisers is the most important part. As they’ve done this, they’ve really started to help clients in a way they haven’t helped them before.

“Both Ray Miles and myself have been in the industry for 40-plus years “I said to Ray as we accepted the award, ‘Who says you can’t teach an old dog new tricks?’ It’s recognition that we continue to evolve.”

“And the supertanker is CFPL.”

On the mystery shopping analysis, licensees were assessed according to CoreData’s ACQUIRE index (see box), a service quality indicator for licensees. Seven index components are aggregated to “capture the various aspects of critical customer acquisition dimensions”.

“This system creates an easy to understand robust benchmarking tool and variations in total and component scores can be assessed and areas for improvement targeted” CoreData says.

Shoppers’ actual experiences are mapped against the index components to produce an overall score. CoreData measured the experiences of 270 shoppers across 14 licensees. Overall, this year, the licensees’ ACQUIRE index scores were better than last year, and the licensees as a group scored better in six of the seven index components – the sole exception being “intention”, where the average score fell marginally, from 59 to 58.

Client at the centre

RI Advice chief executive officer Darren Whereat says the licensee has “spent a lot of time across the past 18 months working around our engagement processes and putting the client at the centre of what we do”.

“This is an independent test of that,” he says.

“It’s all been around improving that client engagement process. I don’t think anything was lacking; I think RI has always had a high and respected calibre of adviser…but general practice management is something that we’ve concentrated on.

“No two clients are the same, and we do a lot of one-on-one coaching to make sure they understand the needs of the communities they are working in.”

Whereat says engagement is really about “understanding why people are seeking advice”.

“We still have only one in five people seeking advice, and we’d like RI Advice to take a leadership position in getting that figure up,” Whereat says.

That involves paying close attention to “those one-percenters”.

“Making sure you return phone calls; making sure the premises are professionally presented,” he says.

“If you go in and look at the [CoreData] results, we were consistent against everyone else – we were consistently high across all categories.”

 ASSURANCES – Ability to demonstrate and communicate knowledge/skills  Macquarie  RI Advice  Apogee
 COMPLIANCE – Ability to satisfy relevant financial regulations  Westpac FP  NAB FP  Securitor
 QUALITY – Ability to satisfy customer needs and provide perceived value  AMP  CFP  Godfrey Pembroke
 UNDERSTANDING – Ability to understand customer needs  IPAC  NAB FP  Macquarie
 INTENTION – Customer intention to use/reuse/ recommend adviser  RI Advice  Westpac FP  Godfrey Pembroke
 REACTION – Customers’ emotive/affective response to purchase process  NAB FP  AMP FP  Godfrey Pembroke
 ENVIRONMENT – Intangible/tangible aspects of client-adviser experience  Godfrey Pembroke  IPAC  ANZ FP

Source: CoreData

* This article was edited on June 11 to amend and clarify comments made by Ray Miles.

Simon Hoyle is head of market insight for CoreData Research.
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