Godfrey Pembroke, one of six large licensee dealer groups NAB owns, has decided to separate from the bank and become an independent licensee.
At March 1, 2018, Godfrey Pembroke comprised 138 of the 1511 advisers within the NAB licensing network. National Australia Bank and GWM Adviser Services are the two largest NAB-owned licensees, with 486 and 470 advisers, respectively.
While no formal public announcement has been made, rumours of the split were confirmed by Tom Reddacliff, chief executive of Encore Advisory Group and a Professional Planner advisory board member. Reddacliff was managing director of Godfrey Pembroke between 2008 and 2012 and has held several senior positions within NAB’s wealth arm. He explained the genesis of the decision to Professional Planner.
“Godfrey Pembroke has its own adviser association, called Practice Development Group,” he said. “About two months ago, they did a national roadshow in each state to talk to their members about what they were observing in the industry, their relationship with NAB and where they should take the group. What came out of it was a desire to forge an independent path and emerge out of NAB. There has been a first meeting held and notification of that intent was given.”
Reddacliff was then brought in to facilitate the process.
“After the resolution was made, they then engaged me as a consultant,” he said, “to assist in taking that new path and in making sure there was a constructive, professional approach in moving away from NAB ownership.”
He explained how the vision for Godfrey Pembroke, moving forward, was to continue with its track record of being ahead of regulation. He pointed to its “very early” switch to no-commission bonuses in 2006 as being an indication of its early-adoption ethos.
“The group wants to forge a new independent path, they don’t want to just be a vertically integrated independent model,” he said.
In light of the findings emerging from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Godfrey Pembroke’s split from NAB could herald large swathes of licensees owned by the big banks and AMP taking an independent route. Reddacliff agreed that Godfrey Pembroke would probably be among the first of a broader trend away from the big five.
“I do think this is the first wave of the dismantling of the existing order,” he said. “If you look at the stats around the top five and the large number of advisers moving out, I think that trend will, if anything, accelerate.”
Figures obtained by Professional Planner, courtesy of Adviser Ratings, show an average of 12.93 per cent of advisers have left AMP and the big banks in the 22 months leading up to March 2018. There are 7691 advisers remaining at the nation’s five largest licensee owners.
It would be in the institutional providers’ best interests, Reddacliff said, to make any transitions as smooth as possible.
“If I were in their shoes, I would be trying to make it a harmonious, co-operative move, because it’s inevitable.”
More important than the move away from the institutional side, Reddacliff said, was the nature of the new breed of licensees. Godfrey Pembroke, he said, would strive to be at the vanguard of “conscious” dealer groups, and “act like a professional co-operative”.
“There will be a much more distinct separation of product and advice as a result of the royal commission,” he said. “Everyone is seriously looking at it leading to a more dispersed market and more scalable independent groups.”
Reddacliff also foretells a massive upheaval in the way ASIC deals with the shifting licensee landscape.
“I have a view that [ASIC] will adopt a far more data-driven approach,” he said. “I think, in the future, people will self-regulate first, and then eventually all [Statements of Advice] will go through a back-end compliance tool overseen by the regulator. They’ll want firms’ data centres to match up with theirs. And frankly it’s a much better system.”
His timeline for this development is shorter than many may think.
“I think this is going to happen in three to five years, not 10,” Reddacliff said.
The way forward for Godfrey Pembroke, meanwhile, will be a careful and amenable dissolution of the corporate ties with NAB.
“The next meeting with NAB is in the middle of May…where we’ll be getting down to a more granular level of detail about what’s involved,” Reddacliff said. “At this stage, we’re focusing on understanding each other’s objectives and really testing the temperature. And I have to say that, so far, [NAB general manager of advice] Ross Barnwell has been absolutely professional and amicable in our dealings.
“It’s better for clients and businesses if you do this well.”