‘Punitive pricing’ won’t fix the licensee scrutiny gap: Shuttleworth

Centrepoint Alliance chief executive officer John Shuttleworth says he is not a fan of a proposal floated by the Financial Services Council to shift the burden of funding the ASIC levy from individual advisers to AFSL holders.

Shuttleworth tells Professional Planner that the FSC’s idea, contained in a white paper on the future of licensing published last month, would raise the cost of holding an individual AFSL, and that he is unconvinced it would achieve anything beyond favouring scale.

He says the industry should operate on a level playing field on supervision and monitoring, and that larger licensees such as Centrepoint tend to attract more scrutiny from ASIC than smaller ones do.

But he says the fix is to address that scrutiny gap directly, not to price small operators out of the market.

Shuttleworth says movement by advisers toward boutique and smaller licensees, some of them self-licensed, is evidence the market is sorting itself out without regulatory help. 

“I think some of this stuff is often a reaction to market forces and what’s going on,” he says. Competition among licensees should be decided on service and price, not on which of them can absorb a bigger fee. 

“We’re a service company. If we provide great services at a reasonable price, then people are going to use us,” he says.

“Don’t create structural barriers and reasons to artificially protect your industry, keep it open.”

Centrepoint isn’t a member of the FSC, and Shuttleworth says the company sits closer, philosophically, to the Financial Advice Association Australia, the advice practitioners’ association. 

“We’ll talk to both of them, and if there’s sensible kind of reforms… we look at and say that makes sense,” he says. But shifting more of the levy on to individual AFSL holders isn’t one of them. 

“I just don’t subscribe to the charge people more and put more costs on small business,” he says.

“Don’t create punitive pricing in order to try to favour large licensees.”

Shifting focus

The ASX-listed Centrepoint is shifting its salaried advice arm from a pure employment model toward equity participation in advice practices, and expects that shift, along with continued growth in its core licensee business, to drive higher earnings over the next three years.

Shuttleworth tells Professional Planner that Centrepoint has given guidance on earnings before interest, tax, depreciation and amortisation (EBITDA) of between $14.5 million and $15.5 million for FY27, up from $12.3 million in FY26.

About $2 million of the growth is expected to come from licensee fee growth as adviser numbers rise, with the balance built from recent salaried advice acquisitions, including three advisers acquired from industry fund Brighter Super, and others from the Pinnacle Wealth and Cairns Wealth practices.

Shuttleworth says the business is building momentum.

“If you look at [FY]28 and [FY]29, if we just forget any scale we can get from the platforms and just maintain the current momentum – this is non-acquisition, this is just organic-based – we’ll add another $3 million on the licensee fees and around another $3.5 million on the salaried advice, less than direct costs, and we get to a $20 million earnings number”.

Net revenue has grown from $28 million when Shuttleworth joined the business in 2021, to $43 million in the year just ended, with EBITDA rising from $3.4 million to $12.3 million over the same period.

“When I joined, the business was pretty much bouncing the cash flow line,” Shuttleworth says.

“We did that big acquisition of Clearview’s advice business, which was Matrix and Clearview, and that established a foundation. We’ve been growing the business since.

“We’ve done a pretty workmanlike job of managing the costs within the business.

“So as the business has scaled, and whilst we’ve put on additional employees, we’ve been prudent, and the cost-to-income ratio has fallen down to 71 per cent”, from 88 per cent in FY21.

Three pillars, one split in two

Shuttleworth describes Centrepoint’s advice footprint as authorised representatives under its three AFSLs, the largest self-licensed segment in the country, and salaried advisers, a description he now refines.

“I’d almost describe it as in the past we’ve referred to it as the salaried advisers, but I’d split that into two and say we have the wholly-owned business that we have, where advisers are effectively employees,” he says.

“But what we’ve now signalled is to move into what I would describe as the equity participation in high-quality advice practices.”

Centrepoint had 576 authorised representatives under its licences at the end of June and around 1600 advisers in total across its licensee and self-licensed networks, against a total market Shuttleworth puts at about 15,000.

Divergent economics

Shuttleworth says the segments exhibit very different economics. A licensee charging a flat annual fee of around $50,000 generates a fraction of the revenue available from owning an advice practice outright.

For example, if an advice firm generates $550,000 of revenue, “that’s actually about 11 times the revenue that you generate from a licensee in that business”.

Practice margins typically start between 25 and 35 per cent and can reach close to 40 per cent in a well-run business, as scale begins to bring efficiency.

“Participating in financial advice practice margin is highly attractive, and there’s a lot of acquisitions going on by many players in the market,” he says.

While its licensee business remains at its core, growth there is harder to achieve outside of modest regular fee increases.

“You’ve got fundamentally a market that’s been flat… the way you have to grow that business is largely through taking share off other players in the industry,” he says.

The self-licensed segment is different again, priced at a practice level rather than per adviser, with Centrepoint supplying the compliance framework and tools while the practice carries its own monitoring, supervision, audit costs and licensing risk.

Equity participation

Centrepoint’s most recent acquisition – a majority stake in SEQ Advice Group, completed on 2 September – is part of the equity participation strategy rather than fitting the employed-adviser model.

SEQ is a Queensland advice business with offices in Bundaberg and Brisbane, founded by Bill Beimers, a former AMP adviser and chair of AMP’s adviser council. It has five advisers, one completing their professional year, around $3 million in revenue and nine employee shareholders.

“We’ve bought 51 per cent, which gives us majority control. We’ve provided them an initial $500,000 as an initial cash payment, but what we’re doing is it’s deferred consideration,” Shuttleworth says. The effective multiple, calculated in 12 months, is 7.2 times maintainable EBITDA.

Centrepoint’s stake rises to 75 per cent if SEQ reaches an EBITDA threshold of $2.5 million, triggering acquisition of a further 24 per cent.

“The intention and plan is to leave the remaining 25 per cent with the advisers because we think their own equity participation in the business is important,” Shuttleworth says. Centrepoint holds a call option over that stake but Shuttleworth says it would prefer not to exercise it.

Strong tailwinds

The industry tailwinds Shuttleworth says he believes will drive the advice sector are similar to those identified on results presentations by other ASX-listed advice and wealth management firms Count Group and WT Financial Group, including rising demand for advice and a constrained supply of that advice.

“There’s no issue growing and attracting clients because there’s these tailwinds in the industry at the moment, as we all know. There’s more demand than there is supply of advisers,” he says.

Centrepoint has also started building artificial intelligence tools in-house, including for audits and pre-vetting, after hiring a senior AI engineer. Shuttleworth says early productivity gains from AI inside advice practices themselves, particularly file-noting and transcription tools, have cut hours of manual work down to 10 or 15 minutes.

The rapid uptake of managed accounts is doing similar work on the investment side, he says, removing the need for advisers to issue a fresh record of advice every time a portfolio is rebalanced.

All of this supports Shuttleworth’s view that the advice profession is headed in the right direction.

“Whenever I go to a professional development day, or we have a conference, and I speak to advisers and ask how business is, they just say it’s never been busier,” he says.

“It’s exciting times in the industry.”