After establishing their advice business 27 years ago, it’s fair to say Darren Steinhardt and his wife Stephanie are in the middle of a good innings.
That knock looks even better when you consider the original practice is now part of an advisory network that spans 180 advisers, 18 mortgage brokers and a “handful” of accountants, all operating under the Infocus Securities Australia dealer group, which is owned by the Steinhardt Holdings company the couple are majority shareholders in.
Like most success stories, the impressive numbers for Infocus belie the hardship and the graft. It hasn’t been easy, Steinhardt says, with “a lot of trial and error”. Despite the strength of the licensing venture there are still tough days for the affable CEO.
He knows he’s not alone, however, as most advisers are familiar with the struggle. It’s also why the search for community is so ubiquitous in advice.
“Being in business is lonely in and of itself,” Steinhardt tells Professional Planner. “Being in financial services especially, with all the regulatory change, is probably a bit lonelier. Put Covid on top of that… there’s a lot of things that you want to talk about and get off your chest that you may not feel comfortable talking to a friend or even a spouse with.”
What keeps Steinhardt going is another theme advisers know well – building a better life for clients. Seen through the lens of a dealer group CEO, that drive manifests itself into building better solutions for advisers.
Technology has been a major conduit for those solutions. The group has its own proprietary customer relationship management tool called ‘Platformplus’, which has developed from an early web-based machine to a fully integrated cloud-based platform that does most of the things advisers can expect from an Xplan or Salesforce.
“We don’t want to be a software provider… It’s not our main game and we’re not big enough,” he explains. “But we’re good at building software for our business, so we built one end to end system.”
Faith in technology has been a long-running theme for Steinhardt. Two of the group’s IT staff have been with the company over 20 years.
Again, however, it hasn’t all been smooth sailing. In the early days Steinhardt outsourced the coding job for the CRM, which he subsequently found out meant the business didn’t actually own the system. “You live and you learn”, he says.
High touch, full service
Mid-sized licensees like Infocus have fared well in the wake of the banks’ collective retreat. While advisers numbers have fallen, well-positioned groups have been able to survive by trimming their adviser cohort, sharpening their proposition and, in most cases, raising their price point.
Steinhardt says Infocus had to go through its own rationalisation project when it acquired two businesses – Patron Financial Advice and Announcer – in 2014 and 2017 respectively. A host of advisers that weren’t the right “cultural fit” either left the business or retired.
Infocus is also expensive, and unashamedly so. For Steinhardt, however, value is a much better metric than price.
“We’re a high-touch, full-service provider and we price accordingly,” he says, adding that the luxury of running a clean model also comes at a cost.
“We’ve gone through the process of resetting pricing based on removal of conflicts and cleaned product subsidies,” he says. “That was hard to do at a licensee level because we took a leading position and we were probably priced out the market for a while.”
How you look at it
The CEO knows the industry has its challenges, but he takes a relatively positive outlook.
A few things still irk him. Other licensees trying to undercut their proposition and poach advisers “still frustrates the hell out of me”, he says.
The current dearth of affordable professional indemnity insurance is also a struggle most licensees can identify with – especially those without scale. “I wouldn’t want to be smaller going through the professional indemnity insurance dance at the moment.”
The suite of ‘Red October‘ reforms being implemented this month are a “concern”, Steinhardt notes, because it may result in further price increases across the board. But, ever the optimist, he hopes some of the reforms’ rough edges get smoothed in time.
“I do like the decision on nil reporting and I expect we’ll have a few more changes now the regulation is enacted and people see there is certain overreach,” he says. “A lot of smart people are involved putting feedback in place.”
These issues are all transitional, however, and Steinhardt seems in for the long haul regardless of the circumstances.
“I love the advice industry,” he says. “I know there’s turmoil but it all depends on how you look at it. There’s change, but to become a profession that needs to take place and there’s more to come.”