Apt Wealth is bucking the trend of private equity investment in advice businesses and is instead looking to build equity partnerships within the firm as it continues to scale.
“You sit around the table with other businesses and there’s two topics of conversations that dominate. One is AI and the other is capital,” Dunbar tells Professional Planner.
“I understand the need for capital. You need capital for succession and for growth and scale… but it’s something we need to be really aware of and careful of – private equity money will be right for some firms.”
Dunbar says there were concerns that when capital operates on a short-term deal cycle, it can lead to some of the “wrong behaviours”.
“Advice is such a trust-based profession and before the [Hayne] royal commission we started being treated like a manufacturing or a distribution business,” Dunbar says.
“That institutional ownership and vertical integration, it was sold as promising more efficiency, but what it led to was conflicted outcomes. It wasn’t bad people, it was incentives becoming misaligned.
“We want to preserve the idea of advice as a profession, not as a commercial product per se, so just being careful of those capital sources.”
Apt Wealth has offices in Sydney’s CBD and Northern Beaches, Melbourne and Geelong.
The firm recently added financial advisers Toby Simpson and Elizabeth Wise, and manager of advice and client support Rochelle Dunham as equity partners. In total, the group has 26 direct shareholders, plus an employee share scheme.
“They’re all long-term contributors at Apt that live by all our values and share in the vision that we’ve got,” Dunbar says.
“All the staff have some share ownership. It creates real alignment, understanding, honest conversations and a commitment to try and get better.”
Dunbar says the aim is to create a multi-generational, enduring, employee-owned firm.
“We think that with that long-term mindset that allows you to make the best decisions for clients, for staff and for shareholders, and you can give confidence that you’re there for clients, for their kids and their kids’ kids,” Dunbar says.
“For your staff, they know you’re making decisions to develop and grow them into great advisers and great leaders of the profession.”
Dunbar says the firm’s vision is to create scale as a defence against the industry-wide shortage of advisers.
“We really feel like we need to train and develop our own advisers and leaders for the next generation,” Dunbar says.
“You need scale to be able to do that properly. Technology, which is obviously what everyone’s talking about at the moment, we need scale to be able to invest properly.”
He adds the firm has some scale but needs to be bigger to be able to effectively invest in those areas.
“We’ve got a few M&A transactions happening. If you can find like-minded people that want to do the same thing and share the same vision, we’re better doing it together,” Dunbar says.
The self-licensed group has 29 advisers, according to Adviser Ratings data, servicing an average of 100 clients each.
Dunbar says the firm has capacity to serve more clients with more efficient technology and processes.
“You’ve got to do that in a way where you maintain the personal touch and I don’t think that’s got an infinite number on it,” Dunbar says.
The firm is aiming to use technology in every part of the business, with a focus on addressing areas of inefficiency.
“You could improve the client experience, the onboarding process, the review process, these are things that just take a long time, and I have a lot of hands touching them,” Dunbar says.
“We can see some benefits with AI improving that in the back end where we still maintain a personal front end with the clients.”
Dunbar says the firm wants to be an early mover on AI, but doesn’t need to be the first mover.
“You spend a lot of time and energy in thinking about [AI], but we’re very mindful and concerned about security risks with AI,” Dunbar says.
