Annick Donat

Clime Investment Management has swooped in to capitalise on the sale of Godfrey Pembroke by Insignia Financial.

The ASX-listed fund manager, which owns licensee Madison Financial Group, announced on Wednesday it had signed an exclusive, non-binding heads of agreement between Madison and Practice Development Group (PDG) to form a strategic operating alliance, after entering a trading halt earlier this week.

A statement by Clime to the ASX made no mention of Godfrey Pembroke, but it is well known in the industry as the longstanding adviser representative body of the dealer group, which was picked up by Insignia as part of its takeover of NAB’s MLC in 2021. Insignia announced last month it would sell Godfrey Pembroke to its authorised representatives in a kind of management buyout.

A spokesperson for Insignia told Professional Planner the wealth giant was not involved in any discussions with Clime and retains control of Godfrey Pembroke.

“As announced on 27 July, Insignia Financial expects to return ownership of Godfrey Pembroke Limited to advisers and retain a minority stake,” the spokesperson says.

“Currently, Godfrey Pembroke remains 100 per cent owned by Insignia Financial.”

However, ownership of the underlying assets and intellectual property within Godfrey Pembroke has been a point of contention. Sources close to the deal say the Godfrey Pembroke licence and adviser relationships have been controlled by PDG since the start of the current financial year, but others dispute this, saying Insignia retains full control.*

Clime told the ASX the creation of a new entity, Service Co, will consolidate the respective service offerings of each group into a single entity that will provide AFSL services to their respective adviser networks.

It claimed the new entity would have 130 advisers and $8 billion in funds under advice. Professional Planner analysis of ASIC data shows that the estimate would include all of Madison’s 73 advisers along with the 59 currently authorised by Godfrey Pembroke.

Sources close to the Clime camp said the ownership terms of the new entity are still under negotiation, noting it is only a non-binding heads of agreement. But it is understood the plan is for Clime to hold a minority stake in Service Co indefinitely, with the majority owned by advisers.

It is also understood that Clime is open to exploring similar arrangements with other licensees and third parties, effectively a co-op type arrangement that delivers scale and synergies. The self-licensed consulting service, Optimise Advice Services, will become a 50-50 joint venture between Clime and Service Co.

Clime CEO Annick Donat, the former boss of Madison and executive in BT’s now-defunct dealer groups, said the agreement between Madison and PDG represents a significant opportunity for our advisers to build a “peer led community”.

“Both groups have a long history in advice and this arrangement will ensure they continue to prosper. Our respective advisers will benefit from increase scale and cost reduction,” she said in the ASX announcement.

She said the deal would help “simplify” Clime’s business model and boost its ability to provide investment consulting and managed accounts services to the broader advisory market.