Centrepoint Alliance has finalised a deal with the $34 billion Brighter Super that will see some 90 per cent of Brighter’s annual review book move to Centrepoint, in a transaction ultimately valued at $1.22 million.
Centrepoint and Brighter Super announced in April the Centrepoint-owned practice Financial Advice Matters (FAM) would acquire the annual review book Brighter inherited when it acquired Suncorp’s retail super business Suncorp Portfolio Services Limited (SPSL).
Centrepoint announced to the ASX on Monday the annual review book will be transferred at a completion price of $1.22 million – a 1.25 times multiple on a contract value of $977,400, but both parties declined to specify the exact number of members that would be transferring.
Brighter is an amalgam of three Queensland funds: LGIAsuper, a public sector fund representing local government workers in the state; SPSL; and industry fund Energy Super. Brighter Super will continue to provide super and retirement advice to members internally, but members with more complex advice needs will be referred to FAM.
Brighter Super chief executive Kate Farrar tells Professional Planner that “around 90 per cent” of the members have chosen to move to FAM.
“It’s been a really good outcome, probably better than we expected and really validates the strategy that we have that is focused on ensuring we move towards our aspiration of every member retiring with advice, which we know we can’t do on our own, we have to do in partnership with other advisers,” Farrar says.
The original agreement would have seen up to 400 members transition to Centrepoint, representing an estimated $1 million in annual revenue.
The deal was structured so that only the members who agreed to transition would be included in the purchase price, which would be valued at the 1.25 times revenue multiple.
The referral arrangement is exclusive for a year and over time can be expanded. The fund is also looking at an additional arrangement that would help give risk-only advice to younger members. “We’ve got a large risk-only book,” Farrar says.
Centrepoint CEO John Shuttleworth says FAM has roughly half of its funds under advice with industry funds, putting it in a unique position where it can serve the retail and industry fund world equally effectively.
“We’re really happy work with the industry funds and if we can do something they can’t or chose not to do then that’s a benefit to both parties,” Shuttleworth says.
“The geographic footprint of our business being throughout key regional areas in Queensland means there was a natural fit.”
Bleeding maroon
The Queensland-based FAM, which was acquired by Centrepoint in November 2023, was selected because Brighter Super was searching for an advice business “committed” to the state.
Farrar says around 85 per cent of Brighter’s assets under management belongs to Queensland-based members.
“We were looking for [an advice partner] who had good regional dispersion or distribution which crossed over with our membership which crossed over with our membership,” Farrar says.
“It’s going to be very important they are where our members are in order to make that referral arrangement work.”
FAM serves a mix of retail and industry fund clients, including another predominantly Queensland-based fund, Australian Retirement Trust, and already has a strong relationship with Brighter.
The firm has offices across the state, serving the greater Brisbane area, Gold Coast, Hervey Bay, Mackay, Rockhampton, Sunshine Coast, Toowoomba, Townsville, as well as an office in Sydney.
Centrepoint group executive for financial planning Francis Rigby, who led FAM before the acquisition, says it is coming up to 18 months since the practice moved to becoming a salaried-adviser business owned by its licensee.
“The thing that’s really excited me is some of the synergies in relation to the tech stack and being able to leverage a lot of technology for the benefit of clients,” Rigby says.
“Ten years ago, when we were setting up Financial Advice Matters, we were licensed under Centrepoint and the reason we chose them was because of the cultural alignment and that’s proven itself correct since the acquisition.”
State of (Brighter) Super
Brighter Super faces similar challenges to several other industry funds: not only does it have to deliver retirement solutions for members under the Retirement Income Covenant, but must also hold onto its high-balance members.
The Conexus Institute’s* State of Super research found that Brighter Super was among the “mid-mega” industry funds struggling to stem member outflow.
Sending the advice book to a third-party might seem counter intuitive to helping retain members, but Farrar believes improving the advice offering will help.
“We work very hard on our product, to make it more and more difficult to justify leaving us to be honest,” Farrar says.
“We’ve done three reductions in fees over the last three years. Since our mergers we’ve brought admin fees down 40 per cent. We’ve worked very hard on our investment ecosystem to ensure our performance is excellent.”
*The Conexus Institute is a not-for-profit think-tank philanthropically funded by Conexus Financial, publisher of Professional Planner.
