Shaw & Partners CIO Martin Crabb (centre)

The transition of Shaw & Partners from a transactional, brokerage-based business to a true advice firm with managed account capabilities required a nuanced approach according to chief information officer Martin Crabb.

Instead of asking advisers to transfer their books onto managed accounts holus bolus, Crabb says the group took a “modular” approach by letting advisers continue to run investments they specialised in while picking up managed account sleeves they couldn’t add value to by running themselves.

Speaking at an Institute of Managed Accounts event in Sydney Tuesday, Crabb explained how Australian advisers are akin to “legally independent contractors” who want to engage with clients and create investment solutions their own way.

“We have some advisers who would use goals-based portfolios where all of the decisions are made for them in terms of asset allocation, manager selection, securities etc, and they want to use that to make their business more efficient,’ Crabb explained. “But other advisers say ‘No, where’s my value add in that? I want to do asset allocation’.”

Shaw & Partners offered a holistic, goals-based managed account solution from AMP to its advisers, he recalled, but not many “chased that boat”.

The firm then built a platform that prioritised flexibility as much as technology.

“We still have the goals-based platforms and that’s got 20 per cent of our business, but more popular is our modular approach; some advisers will just use the global equities sleeve, some advisers will just use the hybrids…”

The modular approach was especially useful to Shaw’s 200 advisers – most of which come from a stockbroking background and were happy retaining the freedom to utilize their specific knowledge base.

Crabb, who last year described the process of getting advisers on board with managed accounts as being “like hand-to-hand combat”, explained how important the modular strategy has been in bringing advisers into the managed accounts fold.

“Advisers are not going to go from being stockbrokers to wealth managers in one easy step, although we’d like them to,” he said.

“So how do they phase it out? They still do their equities, still do the IPOs and all the stuff that’s interesting, but they can slowly move their stuff across to a wealth business. That’s kind of how we’ve integrated the offering into the business strategy.”

‘Anyone can do that’

Speaking to Professional Planner in June 2020, Shaw and Partners’ co-chief executive Earl Evans explained the firm’s transition to a wealth management business, adding that he doesn’t think of the firm as a “broker-driven business” anymore but rather a wealth business that also has “stockbroking execution” side.

“Over the last 30 years Australia has rapidly globalised and our business has tried to do the same as well,” Evans said. “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.”

Shaw’s evolution was given a private equity boost in 2019 when Swiss banking group EFG paid $60 million for a 51 per cent stake in the business, which was subsequently increased to a 75 per cent in mid-2020.

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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