Integro and Coastline merger a vote of confidence in the value of risk advice

Perth-based Integro Private Wealth’s merger with fellow WA firm Coastline Private Wealth will enable the combined entity to build a separate risk advice division that sits alongside its wealth management business and bring scale to its insurance offer, Integro partner Justin Gilmour says. 

Gilmour tells Professional Planner that as advisers continue to desert the risk market, and as that sector undergoes continued aggregation, “it’s a time to lean in”. 

“It’s more challenging in that space now to operate, so we really want to build out a division on that risk side without diluting the value of the wealth side.  

He says Integro’s risk service has always met client needs but “it’s not as proactive as what we’d like, and also it’s something where, with risk premiums going through the roof in terms of pricing, it’s a really good opportunity to be a specialist in that market and rather than [taking] sort of a cookie cutter approach, do it properly”. 

Gilmour says a properly constructed wealth plan should  eliminate the need for insurance over time. 

“At each review with the client, we would be doing updated financial modelling to show the client where they’re tracking… back against those objectives,” he says. 

“So, as wealth increases, we want to make the risk redundant as quick as we can. It’s purely around what the need is at the time, and as they reach, or they get closer to, financial independence, the need for the risk [insurance] would diminish. 

“So, if a client is financially independent and they can meet all their financial objectives, then, in my view, the need for the cover goes, and then we’re focusing more towards wealth creation and growing wealth rather than protecting it. The need for that is gone.” 

He questions whether other advice firms test a client’s risk need against the gap between their current assets and financial independence, asking how they can determine the need at all without that modelling. 

“If you’re looking at a whole of wealth approach, how do you do that without addressing the risk need?” 

Gilmour says Integro has avoided referring risk advice to an outside specialist firm, which leave the firm dependent on parters to refer wealth clients back in return, and is an arrangement that tends to be volume-driven rather than “done with the depth” that the client really needs. 

Gilmour says that while risk insurance remains integral to advice and wealth management, it’s not an easy space to work in, with a misalignment of stakeholder interests. 

He says product manufacturers are “increasing premiums like crazy, which then forms the wrong behaviours because then your advisers have to churn [insurance policies], which is not great” 

“But it also costs the provider money to put it on the books in the first place. You get it through underwriting, so that doesn’t align with your interests. And I think also it certainly doesn’t align with the client’s interests either when you’ve got the non-disclosure over seven years. So, you’re forced to be moving it all for the wrong reasons. 

“And it’s certainly not in our interest to keep moving cover. It’s time-consuming, it’s not profitable, and it’s very difficult to get it through now.  I think, in that sense, the industry needs a look at itself to align the interests of all stakeholders.” 

As part of the merger, senior Coastline advisers Joel Sharp and Alistair Fink, along with two risk administration staff, will move across to Integro. Gilmour says Sharp is a risk specialist who worked on the technical side at AXA, and Fink has a strong investment background from time working with UBS. 

Coastline is Integro’s second merger this calendar year, following a similar deal with Lighthouse in April. Even though there are any number of potential deals available, finding the right businesses to buy is not easy, Gilmour says.  

“We’re definitely saying no more than we’re saying yes,” he says. “There’s multiple conversations going on, but it’s really those quality advisers that potentially have struggled with scale and distribution and things like that… probably that’s the tricky thing to find. 

“There’s lots of M&A activity in the market, but… some of the ones that we walk away from that others pick up – and some of these are good businesses – but you just go, I’m surprised that they would actually go ahead with some of these.”