COG FS take 19.99% of Centrepoint
After being rebuffed by Diverger, COG Financial Services has picked up 19.99% of major financial planning group, Centrepoint Alliance.
COG announced to the Australian Securities Exchange this morning that it had acquired 19.99% of Centrepoint for $13 million.
Its announcement said that its strategy had two limbs – to own interests in businesses that are involved in the distribution of financial services and building a scale business in retail funds management.
“The strategic rationale for the acquisition of the CAF interest is that it builds on the first limb of COG’s strategy,” the company said.
It said that by acquiring the Centrepoint stake, COG was further applying its expertise in the identification, due diligence, integration and management of interests in financial services distribution businesses, in this case wealth management services.
COG obtained its stake from ClearView Wealth’s decision to sell down its interest in Centrepoint which it acquired as part of the transaction to sell its financial planning business to Centrepoint.
Just what value to Dealer groups Offer? … Clearview seems to be the smart one here, exiting advice and “eventually” walking away with the cash. With the removal of kickbacks, shelf space, and volume bonuses all we’re seeing is consolidation, takeovers, and capital raisings. I’m predicting large Dealer groups like Centrepoint Alliance will continue to struggle because they haven’t worked out what game they are in.
All these groups are in the same game. It’s the same game the big institutions were in. Product sales.
The returns available from licensee services, or from equity holdings in practices, are minimal. They are just a means to end. They are a way of influencing advisers to recommend the licensee’s / equity partner’s products.
These new groups may not have the mass market branded products of an AMP or MLC or CFS, and they may not be getting the dealer group kickbacks of old, but they will have some form of inhouse product, such as SMAs. Their financial success is ultimately driven by the sales volume they can get from their inhouse products. That’s why there is so much merger and acquisition activity. To get scale for inhouse products.
It is filling the vertically integrated gap left by the withdrawal of the banks, with a slightly different style of vertical integration.