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Advice licensee consolidation will continue

Mike Taylor16 March 2022

In the past 12 months the Australian financial planning industry has witnessed three significant licensee acquisitions – Centrepoint Alliance with ClearView, Fiducian with People’s Choice Credit Union and now WT Financial Group with Synchron.

Before that, Clime Investment Management acquired Madison from OneVue and Paragem was acquired by Easton.

That sequence does not even take into account the IOOF acquisition of MLC Wealth or the earlier acquisition of the ANZ wealth businesses.

And the chief executives of major licensees are suggesting that financial advisers should brace themselves for more consolidation in circumstances where scale has become the crucial ingredient to continuing commercial viability for financial planning licensees.

This much was admitted by Synchron’s Don Trapnell as he reflected upon the announcement of his company’s acquisition by WT Financial Group and it was reinforced by Infocus Wealth Management chief executive, Darren Steinhardt.

However, the recruitment of individual advisers and successful advice practices is seen as a more attractive path to scale than undertaking the acquisition of other licensees because of the liabilities which can attach to licenses.

This was reflected in the around $3 million apportioned within the WTF/Synchron transaction to deal with liabilities.

Speaking to Financial Newswire, Trapnell said that licensees needed the economic efficiencies which came with scale and that was something which was being achieved via WT Financial Group’s acquisition of his business.

“600 authorised representatives gives us that scale and that is a big thing in terms of ensuring viable succession,” he said.

Infocus’s Steinhardt agreed with Trapnell that developing scale has become a key and that it was something that was going to continue driving consolidation with the financial planning industry.

Like Trapnell he also suggested that smaller licensees often did not fully appreciate the impact of regulatory obligations until they had cause to deal with the Australian Securities and Investments Commission (ASIC) or the Australian Financial Complaints Authority (AFCA).

Infocus, like other mid-sized licensees has been actively recruiting advisers and advice firms but acknowledged that acquiring another licensee was not always an optimal strategy unless it entailed a good culture and good business operations.

He said that past experience had shown that acquiring another licensee might bring with it good people but it could also bring regulatory problems which might not manifest for two or three years down the tack.

Mike Taylor

Mike Taylor

Managing Editor/Publisher, Financial Newswire

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