Virtual Business Partners’ search for a long-term capital partner has concluded with AZ Next Generation Advisory and financial advisory business Invest Blue co-investing in the Australian-owned, Philippines-based paraplanning and back-office provider.
The deal announced on Monday will see AZ NGA and Invest Blue acquiring a 40 per cent stake in VBP, while the group’s management team will increase their holding to 20 per cent and founding shareholders David Carney and David Deegan will retain 40 per cent.
AZ NGA chief executive Paul Barrett told Professional Planner the firm has moved to identified key supply chain opportunities after recognising the “old dealer group model is no longer sustainable”.
“Investing in advice businesses, you get a firsthand look at where the bottlenecks and opportunities are. We saw the opportunity to invest in the supply chain and build an adviser utility service.”
Strategically for AZ NGA, it gives the professional service utility another stake in the advice supply chain. For Invest Blue it is part of its strategy to become Australia’s largest integrated financial advice brand.
“Licensees have always led with compliance and licensing,” Barrett says. “We see that as important components, but they’re just one component. Leading with a proposition that is more commercial and helps SME businesses become more efficient and profitable are vitally important.”
Best use of talent
The back-office service helps take the pressure of advice firm recruitment in an industry where client service and other back-end roles have created stress for employers.
“The biggest issue advice businesses tell us they face is the war for talent,” Barrett says. “Every firm we talk to, every time we do a board meeting, this discussion comes up and has so for about the last seven years.”
VBP has been on the hunt for a long-term capital partner to help manage key-person risk and succession, as well as growth plans.
“People consider VBP a paraplanning business; it’s not really,” Barrett says. “It’s a talent acquisition and management, and resourcing business that has infinite possibility in terms of the capability it can bring to an SME business.”
Licensees have been moving away from relying on licensing and instead offering more services; with AMP CEO Alexis George describing the current regulatory environment as being tough to generate a profit in with the company also focused on building out its services.
Diverger’s recent proposed acquisition of Centrepoint Alliance would have seen it become the third largest licensee also with a focus on scaling up its service offering.
Individual licensing could be a potential outcome of the ALRC’s review into the Corporations Act, which could mean licensees only have the option to be service providers. However, some industry leaders the reform shouldn’t be a priority.