Clime to put Madison advisers in driver’s seat

Madison Financial owner Clime Investment Management has confirmed its intention to move to a new model which will see the license “more substantially owned and controlled by advisers”.

It has done so at the same time as the company’s chair, John Abernethy acknowledged that the business is not profitable and outlined plans to reduce costs by an annualised $1.5 million a year.

Abernethy said that Clime Group directly advises clients with total funds under advice and management approximating $1 billion and managed $300 million through its listed investment company, separately managed accounts and managed funds.

“Our licensee business (Madison) licences advisers who provide financial advice on over $4 billion of assets,” he said. “Thus, either directly or indirectly, we touch clients with well over $5 billion to investment.”

“So why are we not profitable at present?” Abernethy asked and then suggested Clime had not appropriately benefitted from the aggregation of its business and that the costs of a reset had been greater than expected.

“The market has and continues to change inside the advisory landscape presenting both challenges and opportunity that are now being acknowledged and grasped in our business planning,” he said.

“So, whilst we are currently not profitable and expect to report a loss at our half year, we are confident that the business reset will pay reasonable returns that will begin during the second half of FY24.”

Abernethy the noted that Clime’s Private Wealth offer was undergoing a business reset to move the bulk of advised or managed business to an SMA solution with a compatible client administrative solution.

He said that included in this approach was a reset of the company’s MTIS service offer that would move the business from direct equities to SMA solutions which would create capacity for advisers.

“We have undertaken both strategic reviews and discussions with the Madison adviser community as well as engaging with meaningful discussions with other small AFSLs aimed at achieving appropriate scale,” Abernethy said.

Pointing to increased adviser ownership, he said that the benefit would be that advisers would determine the partners in their community, design and direct their service offerings across their community.