Fortnum Financial Advisers has refreshed independent dealer group Financial Planning Services Australia’s (FPSA’s) offer to advisers and has embarked on the process of recruiting financial planning practices to the new business.
Fortnum managing director Joel Taylor says FPSA is built on the same principles as Fortnum, including collaboration, sharing of ideas and equity ownership for its practices.
He says the first of the practices operating under the “old” FPSA to transition to the new company are “the ones that share our values”, including First Unity, based in Sydney, and Kent Private Wealth, based in Brisbane.
FPSA is aiming to eventually have 20 foundation practices. Taylor says places were initially offered to existing FPSA practices and Fortnum will extend the offer to the broader market.
FPSA is set up under Fortnum’s Australian financial services licence (AFSL). Taylor describes FPSA as “a mini-Fortnum, where the service offering is not as complex as the full Fortnum offer”.
“What we do in Fortnum is make available resources,” Taylor says.
“We either hire them to be full-time employees in the practice management team, or go on an annual cycle of searching out the best ideas, tools and programs that sit around the industry that we can roll into our Fortnum firms over a 12-month period to keep them at the front of the game.”
Taylor says that practices wanting that level of service and support “pay for it”, and those that are attracted to the FPSA offering want “hands-off and less support, but an advice framework and some of the benefits of the Fortnum model, particularly around the ownership piece”.
“The way we do the equity is it’s not about building the next empire [to sell] for $100 million,” Taylor says.
“It’s about the behaviour it drives with our advisers. It tends to be a far more collaborative organisation as a consequence of that equity; and it’s a really good filtering process for a recruitment conversation because we spend a lot of time talking about culture … and we want advisers who share our values and hold them dear like we do, in terms of sharing the ideas that they have got, and asking others for help when they think it’s necessary as well.
“We’re looking for that collective wisdom to drive forward the competitive advantage of the organisation.”
Board representation
Taylor says the practices that join FPSA will have representation on the new company’s board and on the company’s investment committee.
Contrary to earlier reports, Fortnum has not merged with FPSA but rather acquired the intellectual property and the business name of FPSA from netwealth Investments, in a transaction announced in August.
“Fortnum have been contemplating for a serious period of time having a lower-cost model on market,” Taylor says.
“The reason for that is most of the Fortnum firms are larger, on average, being around $1.3 million to $1.4 million [in total practice revenue per annum], with full practice management support and full complement of joint venture support, compliance framework and MDA [managed discretionary account].
“We had a fee model that reflected that, and we priced ourselves unashamedly for that full-service model [but] out of the lower end of the market in terms of revenue, particularly the sub-$400,000 revenue practices.
“You’re only fishing then in a very small pond of businesses when you are recruiting. And we’ve come across a whole bunch of businesses for quite a long period of time where they have shared similar goals, mindset and values, but just didn’t have the revenue profile to get the full service model.
“In conjunction with that, when we came to the agreement with netwealth it gave us an opportunity to take part of what they had built, which was a lower-pricing model and a lower-service model, more importantly – because it’s not all about price, the services that go with that are the most important part – and take that and rework that with the Fortnum overlay.
“It wasn’t a merger and it wasn’t an acquisition, it was actually a new model that we launched to market and we offered the FPSA businesses the first opportunity to take up that offer.
“It’s under our licence, and a new company was constituted. We’ve acquired the IP for the trade name and the business name from netwealth for FPSA, but to all intents and purposes it’s a new model.”
