Brighter Super is aware that divesting its advice book to an external party comes with risk for the fund, but they believe it is necessary to be able to deliver comprehensive advice to its members.
In an ASX announcement on Wednesday, Centrepoint Alliance revealed they have entered into an agreement with Brighter Super to acquire its financial advice book.
Additionally, Centrepoint-owned practice Financial Advice Matters have entered a three-year referral arrangement to provide comprehensive advice to Brighter Super which has 280,000 members.
Brighter Super head of advice Steven O’Donoghue tells Professional Planner he’s not worried about advisers driving members out of the fund, believing the fund’s proposition will hold up.
“Advisers have a duty to act in their clients’ best interests, and that’s something we fully support. While our internal team continues to play an important role, we recognise that some members will benefit from additional support that can be best delivered by specialist external advisers.”
FAM, which Centrepoint acquired in November 2023 with the goal of expanding its salaried advice channel, will be the “foundational partner” for Brighter Super.
O’Donoghue says this deal is still in line with the strategy the fund has been working on to expand the fund’s external adviser network.
“We want to make sure that our members can retire with advice,” O’Donoghue says.
“Our ability to make sure that they can do that is what’s core to our strategy and we believe the external advice market is obviously core to that.”
Centrepoint Alliance group executive for financial planning Francis Rigby, who runs FAM, says they chose to partner with Brighter Super because they have a consistent and client-focused offering.
“One of the things that we have found is Brighter Super’s returns are consistent, and they have a highly competitive offering,” Rigby says.
“When we’re looking at it from a best interest duty, one of the things you’ve got to look at is what’s their offering and then is it in the client’s best interest.”
Enhancing accessibility
The agreement will see up to 400 members potentially transition to Centrepoint, which the group expects will generate around $1 million in annual revenue.
The transaction is structured so that only current clients who agree to transition to FAM by 16 May 2025 will be included in the purchase price, which will be based on a multiple of 1.25 times revenue that is transitioned.
Centrepoint will offer employment to Brighter Super financial advisers through novated employment agreements, which is dependent on the number of customers that transition as part of the deal.
“This kind of partnership model allows more accessibility and enhanced advice options and expands our external advice network,” O’Donoghue says.
Rigby echoes O’Donoghue and says it is one of the reasons why it’s a partnership as the clients “will actually have the ability to opt out of coming across to us on the ongoing review piece”. He added the second reason was the three-year referral relationship with the advice firm.
FAM currently provides comprehensive financial advice, looking after around $1 billion in funds under advice across several super funds.
Rigby confirms the partnership has been in the works for quite a while, especially from Brighter Super’s side as they have been working on their strategy.
While the announcement from Centrepoint describes the partnership as an acquisition, Brighter Super’s own announcement refers to the agreement as a partnership.
Rigby explains the difference in language is likely a result of the different types of businesses.
“My understanding is Brighter Super are divesting [their advice arm] and so we are acquiring that and so that’s why we’ve used the word ‘acquire’ as opposed to [another].”
O’Donoghue agrees that while there is different language used, it is effectively both an acquisition and a partnership. However, he says Brighter Super refer to the agreement as a “divestment”.
“We talk to it as a divestment because we will transition the service across,” he says.
Brighter future
Since 2023, Brighter Super have been developing a strategy to improve its service to advice consumers using its integrated retail fund knowledge.
The fund is a result of a merger between industry funds LGIAsuper and Energy Super, which also acquired the retail Suncorp SPSL Master Trust.
Re-investment into the advice business was part of the completion of the merger process.
At the time, O’Donoghue said Brighter Super was not trying to be an industry or retail fund, but somewhere in-between. He wanted the fund to be advice-led so members could choose to seek advice internally or externally.
In February 2024, the Queensland-based fund reinforced its commitment to being advice-led with the announcement of a series of roadshows to present its services to advisers around the state.
This was part of the fund’s dedication to becoming more attractive to financial advisers ahead of the Delivering Better Financial Outcomes reforms, as well as helping fulfill its obligations under the Retirement Income Covenant.
