When CoreData first started measuring the performance of Australia’s financial planning licensees in 2001 there was a broad belief that businesses operating independently would soon be gone.
The consensus was that they would be crushed by the scale of the bank- and life insurance-backed channels that would use resources to pay, support and train planners to build loyalty and preference.
More than a decade later, purchases and mergers aside, the independent licensees are flourishing, to the point that a new one – Koda Capital, under the command of ex-National Australia Bank senior executive, Paul Heath – launched this year, while one of the leading independents, Fortnum, merged with Financial Planning Services Australia (FPSA – a subsidiary of netwealth).
There is a critical clue in FPSA choosing Fortnum to merge with. For a start, Fortnum does not have the chequebook of a bank, and it doesn’t have hundreds of dedicated staff service or the springboard of an international business. But it has something that seems to be quite rare and quite valuable: the reputation of being only interested in the happiness of its planners.
The hero’s journey
In every Hollywood story you get to watch what writers call a “hero’s journey”: how the story’s hero first fails, and then through a process of rebuilding eventually achieves redemption. This provides what’s called the arc of the story.
This is relevant, because in financial services, licensees have to choose who will be the “hero” of the business. The choices are clear, and somewhat limited. The hero can be the platform, the product, the license holder themselves, the adviser or the customer.
Remember that no matter what it might claim, a licensee can have only one hero in the journey. If it says one thing but does another, everyone knows. And it will cause them to lose trust in the licensee.
Year after year, the licensee that wins is the one that makes the adviser the hero of its business. Those that perform less well make the platform or the product or, most horrifying of all, the licensee owner the hero of the business.
Three winners
This year, unusually, there were three winners in the CoreData Licensee of the Year Award: Fortnum, GPS Wealth and Commonwealth Financial Planning (CFPL).
This happened because as a researcher CoreData decided it was nonsense to place the smaller license providers and the big five in the same category. It would be like comparing an oil tanker with a car but using the same criteria to assess them both.
Fortnum and GPS Wealth actually tied for first place. There was a 0.05 per cent difference in their rolled-up satisfaction scores, which is a difference too small to be statistically significant, and too small to declare a single winner.
CFPL won because it fundamentally outperformed all of the big-five license holders in every significant area of the research, outperforming Godfrey Pembroke, Garvan and Charter along the way.
As an aside, some additional recent research by CoreData on adviser confidence reveals that CBA financial planners – CFPL (the branch-based planners), Pathways (the self-employed franchise of CBA) and Financial Wisdom (the CBA-aligned dealer group) – are the most confident about their future of all Australian businesses.
A fall from grace
If you need an illustration of how a licensee can lose its way then there is no more salutatory lesson than the AMP-owned ipac securities.
Year after year ipac has either won or been a contender for top spot in the Licensee of the Year research, but this year it came in fifth and scored worse than CBA’s Financial Wisdom licensee.
The reason for ipac’s collapse is clear: changes in ownership; changes in management; and the fact that its advisers no longer feel the licensee is interested in their success, but interested instead in what they can do to build the success of AMP.
How the research worksThe CoreData Licensee Research has been conducted every year since 2001, using an online poll, in-depth interviews with planners and licensee heads, and focus groups. The research consists of two critical measures: the internal view of a licensee, or how a licensee is viewed by planners working there; and the external view of the licensee, or how it is viewed by planners working for other licensees. Essentially this give the research two perspectives: the satisfaction and the “stickiness” of the businesses currently within each group; and the attractiveness of each dealer group across the critical satisfaction drivers as rated by planners. Each year Core Data separates the measurable elements of the research into four key areas – support, trademark, autonomy and remuneration – and adds licensee services, overall satisfaction and intention to switch as external measures. Advisers are then asked questions, which are randomised but fall into these criteria, on a sliding from zero to 10, to generate an unweighted score of satisfaction. These scores are then rolled up to generate a combined score out of 10, calculated to two decimal places. |
The new king
The arrival of GPS Wealth at the top of licensee satisfaction table isn’t a surprise given the focus that its team, headed by Grahame Evans, brings to getting the mix right.
Evans cut his teeth at Professional Investment Services (PIS), and has long been one of the proponents of the satisfaction of the adviser being the foundation for building a successful planning business.
This is now paying off in spades for GPS, as internal satisfaction scores climb amongst its planners. Critically, it is now the business that most Australian financial advisers say they would consider joining.
GPS Wealth’s adviser numbers are growing, with a surprising number of new applicants coming from the accountancy sector. Evans says that while there isn’t a particular focus on the sector, GPS is seeing increased interest from accountants who are attracted to the way in which GPS wealth is making platforms, process and professionalism a core part of what it is doing.
“At the end of the day, everyone wants to give the client the best possible experience and it’s our job to enable that,” Evans says.
Happiest advisers in the country
Fortnum Group was a winner of the Licensee of the Year mostly because it fundamentally dominated the internal ratings. Fortnum’s advisers are, it appears, are the happiest in the country.
Fortnum head Ray Miles is unashamed in both his commitment to advisers and in his belief that by attracting quality advisers and making it easy for them to provide great service to customers, he is fulfilling his obligations to them.
“My role is to make it easy for advisers to service their clients better,” he says.
“It’s my job to sit between them and the stresses of the marketplace and allow them to focus all their energy on the client and run a successful practice.”
The ratings advisers bear this out. Their belief that Fortnum helps them with every aspect of their business is unshakeable, with the licensee scoring a 90.4 out of a possible 100 in internal satisfaction.
The return of the king
In the past few years no other dealer group has been through more turmoil than CBA and its aligned groups.
Under the white hot spotlight of the regulator and the media, the team there has managed to turn out a sector-leading performance with CFPL, and a fourth position overall for Financial Wisdom.
CBA declined interviews for this article, but its ability to deliver the changes it has to have to its team, while generating adviser confidence and turning itself into a destination brand for talented advisers, is in many ways the hidden story of the CoreData research.
