When Sentry Group bought licensee WealthSure Financial Services in 2015, David Newman knew they had some work ahead of them. Wealthsure was at the time subject to a messy enforceable undertaking stemming from activities under the previous owner that involved a split from previous stablemate WPL, who subsequently entered administration.
Newman, however – who is now chief executive of the group – was sure they were on to a good thing. He believed they could deal with Wealthsure’s legacy issues and turn the licensee around.
“There was never any doubt from a resource and a capability point of view that we could work through it all,” Newman says.
After three years and the successful completion of ASIC’s EU, Newman says that they’re not only back to where they want to be, but stronger than ever after going through the regulatory fire.
It may seem counter-intuitive, but Newman believes getting through an EU process has made them more attractive to firms looking to align. Advisers aren’t put off knowing that you’ve been through the ringer, they’re actually impressed by it.
“I’m not saying that makes us better than others, but certainly our diligence and our commitment around the whole compliance and regulatory management framework is very strong,” he says. “We’re not out there shouting it from the rooftops, but it certainly resonates with prospective firms when you’re talking to them, being able to say that you’ve been through that.”
Regretful leaves
Speaking to Professional Planner at the Conexus Financial Licensee Summit in Katoomba on Monday, Newman admits that the road back to redemption in ASIC’s eyes was not an easy one.
The first thing the group had to do, he recalls, was let go of “a number of advisers”. At the time of acquisition Sentry Group had around 250 advisers, while today they have a lean 150.
“There were one or two regretful leaves,” he says, “but they were of a size where there wasn’t any value that could be added.”
Next, as per the EU, Sentry had to appoint an independent expert to confirm that they were completing all the actions required under ASIC’s remediation plan. They chose Deloitte, and the work began.
On five separate occasions between April 2015 and October 2017 Deloitte sent comprehensive interim reports to the regulator updating them on the work being done by Sentry in areas like “adequacy of controls” and “operational effectiveness”. Along the way Deloitte made a number of recommendations to WFS, which they subsequently told ASIC had all been implemented.
As per ASIC’s final report, Sentry received the words they had been waiting for on May 13: “ASIC now considers all the requirements specified in the [court] EU to be satisfied.”
Newman calls the assessment “pretty extensive”, and the final report “a big tick for us in terms of our systems and processes around compliance.”
He explains that the exercise was about turning a perceived weakness into a strength.
“Maybe historically there was a bit of a view around Sentry that we were low touch. I can absolutely guarantee that that’s not the case,” he says. “We have a practical approach to compliance but we don’t cut any corners in respect of that.”
Sentry are now looking to expand. They have a “very strong pipeline” of firms coming through, he says, aided by the banks exiting wealth – in particular licensee Securitor, with “a number of appointments” being made from ex-BT aligned advisers in Western Australia.
Newman knows they will be on ASIC’s radar for some time, and calls Sentry “one of those non-aligned groups that need to work hard and do the right thing”. He believes they’re ready for it, though, and a better licensee owner because of it.
“I like to think that because of what we’ve been through we’re pretty robust in terms of how we manage things.”
