At the end of June it will be 100 days since the Godfrey Pembroke licensee extracted itself from the institutional ownership of Insignia Financial, and director Trevor Bransdon says the licensee and the advisers and practices it authorises are buzzing.
Bransdon, an adviser with the Sydney-based firm Much More Than Money, says now the licensee is back in advisers’ hands, there are “lots of little things that will make a big difference” to how it works and how it supports its advisers.
As part of the transition, the longstanding Practice Development Group will be disbanded.
“The structure we’ve got in place is a unit trust, and the that will be really the main board; and the unit trust will own the shares in Godfrey Pembroke and also then in a service entity,” Bransdon tells Professional Planner.
The business will be led by former Securitor managing director Mark Fisher as chief executive, and the licensee responsible managers will be Bransdon, Fisher, and Lighthouse Capital founder Bernard Schortinghuis.
“What we were wanting to do is improve the ability of the businesses using the [Godfrey Pembroke] license to better serve their clients, or for the businesses to be more efficient for the businesses to generate the profit they’re looking for; but also, for the businesses to have the capacity to help Australians with financial advice,” Bransdon says.
“Whenever we make a decision, or whenever Mark and his team are putting things in place, there’s got to be that consideration or that lens to look through: how does this help the businesses? And why is it going to help businesses?”
Bransdon says some of the changes helps remove the perception of conflict. “We’re not beholden to anyone,” he says.
Some are more substantive, such as “we can negotiate directly with product providers around rate cards and those sorts of things without there being a mothership that might have already negotiated something different, which hamstrings our ability to get better outcomes for our clients”.
Clear benefits
While there are a range of clear benefits to being owned by an institution, Bransdon says Godfrey Pembroke and its advisers are adamant that being owned and run by advisers has some clear benefits.
“It allows us to be commercial and pragmatic, without having numerous lawyers jump in and provide their view on things which can be overkill [and] also means that the ability to be agile is hampered,” he says.
“We can now be much more agile. We want to be pragmatic when it [comes to] things like licensee standards, always making sure we’re keeping the businesses and the clients safe, but making sure that they’re workable standards and they make sense. We’ll have a good view of the risk that we’ll be looking to either mitigate or avoid.”
Godfrey Pembroke currently authorises around 65 advisers and Bransdon says there’s a longer-term plan to increase that number to help capture some further economies of scale.
“We do want to get a little bit bigger, but we don’t want to get too big – something around maybe 200 advisers,” he says.
“But it’s not in three years’ time. We’re happy just to take our time to get there. The business stands up as it is now.
“We definitely want to grow, but it will be the right growth. We will be selective in that growth as well.”
Bransdon says the group is “still working through exactly what the ideal practice looks like [but] we’ve got a fair idea”.
“Essentially, it’s going to be one that likes to advise in the high-net-wealth space, to a degree,” he says. “But in saying that, for a lot of us, a client that is paying fees of $7000 to $10,000 a year is a great client.”
Bransdon says the licensee won’t be a good match for a practice with “hundreds to thousands of clients”, but there are no hard-and-fast metrics around what practices will and won’t fit the picture.
Good humans
An important part will be that “the feel when we interview them and meet with them is going to be one where we all feel that there’ll be a good fit for Godfrey Pembroke, as in they’re good people”.
“It’s first of all, good humans,” he says. “Will they fit in with the group? And they’ve got something to offer the group, and they’re interested in the clients that have a bit more complexity.”
Moving away from institutional ownership has increased costs on some areas but reduced costs in others, but overall “the actual physical cost to the to the businesses hasn’t changed”.
“Our Xplan costs have gone up a little bit, but our licensee fees are the same,” Bransdon says.
“Our professional indemnity insurance actually came down a little bit.
“But we’ve also stripped out a lot of layers that mean we don’t have those costs to pass on to the businesses. There’s not 14 people required to sign off on a newsletter that goes out to clients or that sort of stuff, so we can remove the enablement charges, effectively.”
Bransdon says the aim of the move is to “make sure as a board that we stick true to being able to be advisor-led, advisor-owned, with the focus of really helping each business be the best that it can be by providing the services that they need and the support and the ideas and the learnings from all this”.
The Godfrey Pembroke businesses are now tied together philosophically, but also financially.
“All the businesses have a stake in the unit trust,” Bransdon says. “And we’re all business partners together as a consequence.”
“There’s a good energy in the group. There’s a WhatsApp chat that’s always pinging, there’s a want to share, the advisers have been sending me ideas for improvement, and they’re invested. That’s really exciting.”
