While the recent Professional Planner Licensee Owners List revealed a sharp pullback in adviser numbers for most of the top end in the last year, the resilience of the investment brokerage advisory model has seen outfits like Ord Minnett, Morgans, Bell Potter and Shaw & Partners hold their ground.

Shaw & Partners, in particular, experienced a 20 per cent surge in licensed advisers and completed the sale of a 75 per cent stake to Swiss-based private banking group EFG International, shoring up its capital backing and netting it’s equity holders a tidy return.

In this edited interview, Shaw & Partners co-CEO Earl Evans answers seven quick questions about the current state of the firm, the future of international investment into advice and the intricacies of remuneration and governance.

And to be clear, Evans begins, they’re not a broker driven business.

1 – You have a predominantly broker-driven advice model, how differently does Shaw & Partners operate from a traditional advice firms?

At this point I don’t necessarily think of it as a broker-driven advice business, it’s a wealth business with a blend of full-service holistic advice, but it also has a domestic and international stockbroking execution side which is equally important. Over the last 30 years Australia has rapidly globalised and our business has tried to do the same as well, we started as a genuine long-only stockbroking business, but like all things you have to evolve over time. If we had of maintained an equities-only model over all this time we’d be dead, you know? The old model of buying and selling shares… anyone can do that.

What we have now, an analogy I like to use is that it’s like a good football team; some are forwards, some are centres and some are backs. Some of our guys are good at equities, some are tax experts, the list goes on. It’s all very much client driven, and in a lot of cases the adviser is the conduit for a client to the skillset of another adviser. You can’t just have a team of champions, you need a champion team.

2 – In our recent Licensee Owners List we saw firms with that brokerage DNA like Shaw, Morgans and Ords holding up well compared to other cohorts. It kind of runs against the narrative that advisers aren’t investors anymore and it’s all about strategy and soft skills, doesn’t it?

I think it’s a good observation and broadly true, but there’s another level to it. The days of the massive bulge brackets, the vertical and horizontal selling of product, is all somewhat coming to an end. People are also looking for more of that personalised boutique access with no call centres, they’re not interested in voicemail integration, they don’t want that, they’re looking for comfort of a firm that has some kind of size and structure but they’re moving away from the institutional firms. To some degree it’s what the banks tried to do but they failed massively. Firms like ours, Ords, Morgans, Bell Potter… they have the size and the domestic reach and the skillset but it’s got to be a personal enterprise. You’ve got to be hands-on and nimble.

3 – Have remuneration models for advisers evolved at Shaw in recent times or are they pretty static?

We have a blend, some advisers are on salaries, some are on revenue-based deals. In a lot of cases it all works out the same. We’re happy to discuss remuneration methods, it’s about what works for the advisers but also what works for the firm. In the end the most important thing for us is transparency, we don’t want people driven by commissions.

On the client side, some like a fee-for-service while some people believe that the stocks should be monitored all the time so the prefer to pay on a FUM basis. Other people say they haven’t transacted for the quarter so they shouldn’t pay the fee. It’s really the client that drives it, both models work great.

We can play around the edges with salary and commission, but I don’t think it’s the issue, I think it’s more about corporate governance and how you monitor your advisers and partners. Shaw and Partners hasn’t had a single regulatory breach in 30 years. Why? We’ve always taken a corporate governance approach to the business. I think plenty of people who have changed their model in the last 30 years come out with this great rhetoric about changing to help their client but they fall down on the governance side inside the firm.

Our view is very much an approach of loose-tight. We like a little bit more freedom at the front end of the business and then you keep it tight at the back. So that means flexibility with clients but rigorous governance on the back end. It’s also our job to touch base with the client independent of the adviser and check they’re happy with the advice.