Effective growth for licensees will be about expanding their available services rather than licensing more advisers, the Professional Planner Licensee Summit has heard.
Godfrey Pembroke chief executive Mark Fisher told the summit on Monday morning his definition of growth was not necessarily “chasing adviser numbers or businesses”.
“We don’t have a huge appetite to massively grow the numbers of advisers in our network, but we want to grow the profitability and the long-term viability of the license,” Fisher said.
“It is things like participating in equity stakes and practices and having capital partners to be able to do that.”
Fisher said his aim was to bring together a “centralised hub model” so the smaller businesses could share resources and support, in turn contributing to profitability.
Creating a centralised hub is intended to “shrink the diversity of what happens in the licensee from a practicing perspective, from advice provision as well as investment philosophy, so that the cost of service comes down and [so] make more profit”.
“We’re very much on that much path sustained growth, but also to assist our existing businesses to become more comfortable themselves.”
Fisher said partnerships were essential to his business and that he did not intend to differ from a partnering model.
“There’s obviously fantastic opportunities to partner with, whether it be a platform provider or whether it be a tech provider.”
BlackRock head of Australia Jason Collins said a partnership model could be beneficial for licensee growth.
“Licensees have a huge opportunity at the moment to be scalable, to be business efficiency experts, to really lead a partnership model,” Collins said.
‘A golden age’
Infocus founder and managing director Darren Steinhardt said it was a “great time” to be in the industry and called back to the 1990s as the last great time when advice was rapidly growing.
“[During] the periods of hard time, that’s where you really spend that time building your growth engines and your profitability engines for what happens.”
He said 10 years ago, 90 per cent of the business’ revenue came from advice, but this number was now closer to 30 per cent.
“The rest comes from our technology business. The rest comes from our investment management functions, other things that come from the capital investments we’ve made over the years.”
Fisher also said it was a great time for the advice industry, calling it “ ” but said that licensing continued to be challenging with small margins and heavy regulation.
“It’s a tough game [with] a lot of regulatory environments you’ve got to face,” Fisher said.
AMP group executive, platforms Edwina Maloney said there were “really strong tailwinds” for advice if the regulatory framework was fixed and licensing could benefit from changes in regulation.
“We do need to get the regulatory framework right so that licensing continues to be thriving and so advice can continue to thrive,” Maloney said.
Strategic investments
BlackRock’s Collins told the panel his business had recently made a historic “strategic arrangement with a life business”.
“Never before have we put our balance sheet on the line to make an investment and we took a very small stake in Generation Development Group,” Collins said, referring to the acquisition announced in May.
This was part of expanding the business to achieve growth and profitability.
Maloney said part of the reason AMP exited the licensing space, when it sold its licensee network to Entireti, was to use capital for other areas including products, platforms and technology.
“That was a strategic decision for us to separate more distinctly product and what we call licensing,” she said.
‘Advisory networks’
Steinhardt said Infocus was not a traditional licensee but an “advisory network” in the “business of the business” of advice.
He described the business as “a commercial enterprise that exists to support advisory firms to thrive and grow and develop”.
Steinhardt recommends against “pigeon-holing” businesses based solely on the requirement to hold a license and suggests defining businesses on what it is they do.
He adds that Infocus intends to focus on three things: advice, technology and investment management.
“Technology is that what helps us govern, it’s what helps us get the efficiency and drive the outcomes.”
