Findex can “lead the way” with better client relationships than those of the institutional providers according to the firm’s chief operating officer and group director Tony Roussos.

The banks did some things well, Roussos tells Professional Planner, but at some point their collective focus shifted away from the clients they were trying to serve.

“You look at the issue of deinstitutionalising licensees, and there could be an argument there that the know-your-client rule wasn’t being met,” Roussos says. “We could lead the way in new standards.”

Roussos uses the phrase “fewer, but deeper relationships” repeatedly to describe the group’s client focus. The executive believes a lack of depth in adviser/client relationships is hurting the industry, and the banks aren’t the only ones who’ve lost sight of what’s important.

“The problem with the industry is shallow and disparate relationships,” he says. “You’ve got to know your client before you talk about products. It’s corny but true.”

PE driving growth

Findex authorises 189 advisers across four licensees, and while the group’s DNA is in accounting Roussos says the majority of these reps are fully authorised to provide the “full breadth” of advice.

It’s one of the more entrenched licensee owners in the market, with the group leveraging the backing of private equity giant KKR to make several key acquisitions including a majority stake in Centric Wealth for $130 million in 2014 and a takeover of accountants Crowe Horwath for a reported $200 million in 2015.

Roussos says the KKR tie-up was an opportunity for Findex to grow. “They liked the model, the strong, healthy leadership processes and our advice model,” he adds. “For us it worked.”

Private equity has taken an ubiquitous role in the advice ecosystem across the spectrum; while large groups like Findex and AMP are courted by mega-investors, medium-sized players such as CountPlus and AZ NGA, as well as smaller licensees like Oreana, increasingly look to invest across individual practices.

It’s a dynamic Roussos sees as positive, and a likely driver for the industry over the next few years. “In any industry if you’ve got [venture capital] groups looking to invest in the industry it’s not a bad thing,” he says.

The road to simplicity

Roussos is keen to stress that the group wants to see more simplification in advice.

A focus on building a better know-you-client culture is one manifestation of this; another is Findex throwing its not-inconsiderable support behind the Financial Services Council’s proposal to split personal advice into simple and complex categories.

Some have bristled at the FSC – which is largely backed by product providers – pitching itself as a consultant to the advice industry. Roussos says they deserve credit for trying to provide thought leadership.

Moreover, he says, the council’s plan to have two tiers of personal advice sounds like a good way to simplify the advice proposition and make it more accessible for consumers.

“I don’t know where the answer lies but I do think the simplification of advice will be an important step,” he says.

Findex head of wealth Julian Maloney says the FSC proposal “looks like a really good change”.

Maloney also believes getting rid of the safe harbour provision – which the FSC proposed because it doubles up on FASEA’s code of ethics – is “quite a progressive suggestion”.

“The themes of what they’re talking about is where the industry needs to go,” Maloney adds.

Looking ahead

Roussos takes a positive view on the future of advice, noting that the group “fully supports” the education and ethics standards imposed on advisers. It’s important to put the Australian advice into context, he says.

“The industry’s grown so much over the last 30 years since the superannuation guarantee was imposed but I think it’s been great, we’re leading the way globally in the financial services industry,” he says.

Roussos isn’t blind to the issues that plague the industry, however, noting that the government has recently acknowledged “a shortage of advisers in Australia compared to the demands”.

Findex has its own connection to government after recruiting Malcolm Turnbull to the group’s board last year. The COO says it’s been “good” having the former prime minister to act as a sounding board on governance and steerage.

“For us as a group it’s important at a board level to get a good diversity of thought,” he says. “Obviously, people like Malcolm bring that to the table.”

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. Contact at [email protected]
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