A sale or buyout of CBA licensee Financial Wisdom is looking increasingly unlikely as the dealer group’s advisers are believed to be dispersing, industry sources have observed.

Since news was revealed recently that CBA planned to sell its CFP Pathways franchise – rather than combine it with Financial Wisdom, considered by the industry sources as an alternate viable option – the future of ‘FinWis’, has been in doubt.

While the sources believed the purchase of Count Financial by CountPlus in June made sense for the converged accounting and advice network, the consensus is that there appears to be no natural buyer for Financial Wisdom at this stage.

“There’s just no compelling synergies for FinWis at the moment,” one industry figure observed.

“At this point it’s not about the money, CBA… are almost certainly helping [advisers] with alternative options,” they said on the condition of anonymity.

The source agreed that the Count Financial sale – which netted only $2.5 million after being purchased for $373 million in 2011 – was evidence the bank won’t be financially driven in its future plans for Financial Wisdom.

“They’re not looking to burn anybody, it’s about reputation and being seen to do the right thing. They need to tick both those boxes,” the source added.

A CBA spokesperson denied that the bank has any concrete plans for the licensee.

“There has been no change to the operation of Financial Wisdom. However, CBA has been open about its plans to exit its wealth and mortgage broking businesses over time, whether through a demerger, trade sale or other exit,” the spokesperson said.

Other industry sources pointed out that if a sale of Financial Wisdom was brokered, it is unclear what the purchase would include.

The group already has much fewer advisers than the 321 authorised representatives it licensed, according to the number it had listed in March.

A senior industry executive said that as many as 69 practices are currently in the group’s “offloading protocol”, with about a third of the licensee network “already on the way out the door”.

Most of the licensee transfers are occurring at the practice level, with other licensees coveting the quality practices.

Licensee Fortnum Private Wealth is believed to have taken on a number of Financial Wisdom advisers, as has licensee Advice Evolution, these sources noted.

Advice Evolution CEO David Harris said he would “welcome” FinWis advisers who wanted to join his network. The group was started in 2011 by Harris and two other Financial Wisdom advisory board members; the licensee now has 37 advisers and is looking to grow in the short term by bringing on “a few” new advisers.

“We’ve taken on one practice with four advisers and we’re talking to plenty more,” Harris told Professional Planner.

For some older principals licensed by Financial Wisdom, changing licensees could compound pressures linked to new education standards and the upcoming excise of grandfathered commissions.

John Birt, whose firm Radar Results values licensee and advice businesses, revealed he has sold “some of the larger” Financial Wisdom practices recently.

“A lot of older advisers will want to get out now because by 2024 they will be worth nothing,” Birt says, referring to the cut-off date for the Financial Adviser Standards and Ethics Authority’s degree requirement mandate. “We have about six or seven for sale today.”

 

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning.
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