What makes a successful financial planning practice? The question has been raised formally three times in the last few weeks. And each time there’s been a slightly different answer.
First, Centrepoint Alliance sought to identify the best practices in its network, in three categories: best new practice (less than five years old); best practice, gross revenue less than $1 million; and best practice, gross revenue greater than $1 million).
Then the Financial Planning Association (FPA) sought to identify the best of its so-called professional practices.
In both instances, Professional Planner was enlisted to help make the decision.
All of the practices, across both of the assessments, are outstanding. They would not have been shortlisted otherwise. Of course, this only makes the job more difficult. The experience also proves there’s more than one way to skin a cat.
Centrepoint worked with Business Health to come up with its finalists, and brought Association of Financial Advisers chief executive Phil Kewin and FPA chief executive Dante De Gori in as judges.
The Business Health assessment process distils a considerable amount of information down to a format that is easy to read and digest; and more than that, it benchmarks the results for a given practice against a cohort of thousands of others, to assess how financially healthy the firm is in comparison.
It does this across a range of criteria, and displays the results graphically as red (poor or average health), orange (healthy) or green (fit or super fit) so it’s easy to see, at a glance, where the business is tracking well, where it’s less healthy and, hence, which areas might need more attention. The more green the better. And if you’re so inclined, you can drill down deeper to have a look at what’s going on.
Suffice to say, the Centrepoint businesses enjoy liberal splashes of green and look to be pretty financially fit (even the new ones) with clearly articulated value propositions, healthy profits and bright futures.
In the end, the award for best practice with gross revenue of more than $1 million went to Citadel Wealth Solutions, in Kew East, Victoria; best practice with gross revenue of less than $1 million went to Stephens Plattfuss & Co Financial Services in Bentleigh, also in Victoria; and best new practice went to First Advice Solutions in Adelaide.
The FPA sought nominations from among its Professional Practice cohort, according to set criteria and, along with Professional Planner, brought in AustralianSuper’s national manager of member advice Frank Ceravolo (whose responsibilities include, among many other things, contact with AustralianSuper’s panel of external advice practices) as external judges.
Professional Planner and AustralianSuper sat with the FPA’s head of advice partnerships and membership, Jason Tattershall, and its head of policy and government relationships, Ben Marshan, to run the rule over the finalists.
Part of the focus in the judging was on how practices demonstrate alignment to the values and guidelines set out in the FPA’s Professional Code of Practice, how they make a positive contribution to the profession, and how they uphold the highest professional and ethical standards.
It took more than four hours to assess the finalists. The discussion was frank and robust, with strong opinions expressed for and against each of the finalists. They were, alphabetically, Capital Partners Private Wealth Advisers in Perth; Eureka Whittaker Macnaught, which has offices in Sydney and Brisbane; and MBA Financial Strategists, in the Adelaide suburb of Unley.
(While we’re at it, what is going on that has made the postcode 5061 such a hub of concentrated financial planning expertise? A Google search of financial planning businesses in that suburb turns up more than a dozen results, and the FPA’s Find a Planner service turns up the names of 50 of its members working in businesses there. Must be something in the Adelaide water.)
At the time of writing, the winner has not been announced and we won’t be issuing spoilers on this one.
Thanks are due to both Centrepoint – in particular, distribution and marketing executive Soula Cargakis – and to the FPA, led on this project by Tattershall, for the opportunity to take part in assessing the businesses they put forward. The process of judging these awards reveals some truths about the business of financial planning.
The best businesses simply power through regulatory change. It hasn’t necessarily been painless, and for some it has obviously taken a great deal of effort and commitment, but that does not deflect them from the task of building great businesses.
And great businesses are the foundation of great advice. Working in a financially healthy business, working to clear ethical and professional standards and forging deep relationships with clients, advisers can focus on the task of delivering the best possible advice to the greatest number of people.
More than one of the businesses Professional Planner looked at recognise that while its principals might be great advisers, they are perhaps not the best at managing a business. This is especially true as the business grows and becomes more complex.
Armed with this insight, and coupled with the courage to act on it, they brought people in to run the business, freeing them up to do what they do best, and to focus on doing what they love. It makes a big difference.
Another way to measure success is longevity. Supposedly, about 60 per cent of all businesses fail within three years, and a small proportion make it to 10 years. Fewer still make it to 30, so it stands to reason those must be doing something right. The Sydney-based financial planning firm Stanford Brown reached that milestone recently, and celebrated in style on October 21, with a gala dinner in the CBD.
David Brown launched his advice firm on the day the 1987 sharemarket crash hit Australia; one wonders how things might have worked out if the launch had been the day before or the day after. Between that and a visit during the first week to a taxi company to talk about insurance and advice that led to him being chased off the premises by a man wielding a crowbar, the business got off to a lively beginning.
But long-term success means more than just stubbornness or perseverance, and requires more than luck and timing, although all are helpful. The 480 Stanford Brown guests heard from longstanding clients, and it is clear that good advice has helped them into – on all available indications – a secure and serene retirement.
Along the way, the Stanford Brown event raised more than $130,000 for the Children’s Medical Research Institute at Westmead, to fund research into preventing childhood diseases by the Genome Integrity Unit, led by Tony Cesare.
Whether it’s financial health, upholding the principles of professionalism, giving back to the profession and to the community, decades working alongside clients, or a combination of all these things, success can be measured in many ways.