Hugh Humphrey

Count CEO Hugh Humphrey has backed the benefits of revenue-based licensees fees as the company’s wealth segment posts revenue growth outside of its equity stakes.

Posting its FY23 results to the ASX on Wednesday morning, Count reported a 17 per cent increase in its wealth division revenue to $18 million and earnings before interest, taxes, and amortisation (EBITDA) increased 24 per cent to $2.6 million.

“That’s fully loaded revenue from the AFSLs, costs associated from running the AFSL and profits generated from the AFSLs,” Humphrey tells Professional Planner.

“That’s a standout result, across the industry. I doubt that you’d have seen anyone produce a better result.”

The results come as the largest players, AMP and Insignia, struggle to get their licensee businesses to profitability, posting $25 million and $36 million losses, respectively, in their advice divisions.

Count’s overall net profit after tax was $7.49 million, up from $7.37 million in FY22.

Count holds equity stakes in accounting and advice practices, but reports its equity stake profits in its accounting division, which means the wealth division financials strictly cover revenue and profit of its AFSLs.

“To keep it simple, accounting is our equity partnerships, but strictly speaking it does include contributions from our equity in our financial businesses there; and wealth is just the AFSL,” Humphrey says.

The advice network, acquired from Commonwealth Bank, had to transition to a model that isn’t dependent on grandfathered revenue.

“Unlike a lot of competitors in the industry that might have an advisory business associated to a larger platform and product manufacturing organisation, we’re not, so that business needs to operate profitably on a standalone basis,” Humphrey says.

Count’s licensee fees work on a base fee plus revenue-share model, which Humphrey says keeps the growth interests of the practices aligned with the licensee and is heavily utilised by other AFSLs.

Count doubled its market share of financial advisers in FY23, largely due to the acquisition of Affinia Financial Advisers from TAL which added 115 advisers, increasing numbers from 278 to 379.

The number of clients served grew from 16,716 to 17,721, accounting for $16.8 billion in funds under advice.

Driving a hard bargain