Sequoia Financial Group has almost doubled its market share during a period of adviser attrition with the licensee owner believing there are strong opportunities in the industry.
In its full year financial results to the ASX, it reported revenue increased 15 per cent during a period where advisers reduced by 35 per cent.
Sequoia Financial Group owned licensees Interprac Financial Planning, Sequoia Wealth Management and Libertas Financial Planning.
Addressing shareholders on Thursday afternoon, group chief executive Garry Crole said the opportunity in licensee services and advice has never been better.
“We’re absolutely winning market share at the premium end and that’s why our revenue was able to go up 15 per cent in a market that’s contracting.”
The below chart shows how Sequoia’s market has changed since 2019 after the Hayne royal commission.
“The demand for services from an adviser and the lack of advisers in the marketplace has created some significant opportunities for advisers and we are being contacted on a regular basis from more advisers wanting to join us,” Crole said.
The firm’s net profit after tax grew 3 per cent to $5.7 million but stated it has made several investments including cyber protection where it has employed a full-time cybersecurity professional.
Patiently waiting at the starting line
When it came to potential acquisitions, Crole said the current financials of the company didn’t put it in the best position to quickly jump at potential opportunities.
“We’ve come to the belief that while our share price is soft and I must say I’m extremely disappointed with it, we’re undergoing a number of capital management strategies to improve that.”
He added there are attractive opportunities for consolidation in the financial services licensee area for listed and unlisted companies.
“Whilst we’re trading on a multiple of less than five times operating cash flow, we’re just prepared to issue our currency to acquire businesses that have been rated by the market on [multiples of] 10 to 12.”
Crole said the firm is still interested in acquisition opportunities but is taking a conservative stance.
“We believe we’re the tortoise not the hare.”
