Don’t be shy about raising advice fees says WT boss

Advisers are in a professional services business and should focus on maximising their revenues, even if that includes increasing their fees, Keith Cullen, founder and managing director of one of the largest non-institutional financial planning groups in Australia, WT Financial Group, told Financial Newswire.

The head of the ASX-listed firm, which operates Synchron, Wealth Today and Sentry as three separate brands, said that given the falling numbers of advisers and demand for advice still “going through the roof”, the supply/demand equation was in favour of the profession and expected to remain so “for a very long period of time”.

“We hear a lot of talk of trying to make advice cheaper but it’s certainly not something we are trying to do. We are encouraging advisers to keep pushing their fees up as they are better off dealing with less clients prepared to recognise the value of investing in ongoing advice,” Cullen said.

“That [affordability] is a societal problem for government and the society but it’s not a problem for the profession and should not be viewed as such.

“We are in such supply demand imbalance why would you want to sell your services cheaper? It just makes no sense, [the question] whether it is possible or not is completely irrelevant. It’s a professional services business and I don’t see any lawyers or accountants out there proudly trying to cut their hourly rates.

“Australians need advice and there is enough of them prepared to pay properly for it and the advisers don’t need to be chasing low value clients nor chasing mass market.”

According to Cullen, the adviser numbers will eventually shrink to around 12,000-12,500 over the next few years as a combination of high barriers to entry and natural retirements of advisers.

“I just think the way the industry has evolved over the last few years, and what professionalism has done to it is that it is no longer a mass market business.”

ECONOMY OF SCALE

Speaking on the economy of scale, Cullen said with current numbers of close to 600 advisers spread across three brands operating under WT Financial’s umbrella, he felt comfortable about the size of his business which had already reached a proper level of scale, underpinned by sound financial results.

However, asked about the right level of adviser numbers, he stressed it was more about practices and their profiles.

“It could be a different number depending on whether you have a lot of multi-advisory practices or not but, but I would think anyone about 200 or 250 practices, or otherwise about 300 advisers [would have this scale].

“That is not to suggest that you cannot run some sort of a boutique dealer group at smaller levels, but there is a certain level of intellectual properties that you need within the management team and executive of a dealer group. Also, once you start and try to build a national footprint, you are getting into that position of needing to distribute regional managers across the country.”

Although acquisitions have been a key part of the group’s corporate strategy for the last few years, Cullen said that it was no longer critical.

“We are there now [ have delivered on our corporate strategy] which is not to say that, we don’t see the opportunity in the market for further consolidation, but it’s certainly not a primary driver for us.

“Our primary focus at the moment is to continue to help advisers improve their own profitability, in terms of helping our profitability, and also we have launched our self-license practice offerings- so this will be our focus.”

In March last year, the group acquired at that time Australia’s largest privately-owned financial adviser group Synchron for $8 million following the acquisition of Sentry Group for $7 million in June 2021.