Loss-making Sequoia reduces reliance on InterPrac
Sequoia Financial Group is looking to reduce its reliance on its under-pressure licensee, InterPrac, relying on diversity of its other divisions to ensure its survival.
The company’s “Comprehensive review” of InterPrac is expected to be completed by June.
Sequoia chief executive, Gary Crole has used the company’s first half results to declare that a “strategy is in place to progressively rebalance earnings away from historical reliance on InterPrac toward higher-control, higher-margin segments of Sequoia’s Licensee and Adviser Services division.
The declaration on the InterPrac came as Sequoia announced a 106.9% decline in net profit after tax to a loss of $248,815 and a modest net profit before tax of just $800,000.
However, the company said that it had maintained a strong balance sheet, closing the half with cash of $2.5 million, ASX-listed investments totalling $17.6 million, with additional 20% investments in Euree and Morrisons valued at $10.7 million.
“Despite the improved earnings at an operating profit level in light of the current operating environment within the InterPrac Financial Planning (InterPrac) business, the Board has taken a prudent decision to preserve financial flexibility and declared a reduced fully franked interim dividend of 1 cent per share (1H FY25: 2 cents per share),” the company’s announcement said.
Crole’s commentary accompany the half year result said the operating environment of the firm’s Licensee and Adviser Services division had become more challenging.
“The collapse of the Shield and First Guardian master funds, together with heightened regulatory scrutiny, have affected adviser confidence,” he said.
“The Board has initiated a comprehensive review of the InterPrac business model to further strengthen governance, enhance compliance frameworks and develop a higher-return model.
“Structural improvements across our Legal & Administration Services division have created a more capital-light, technology-enabled platform, increasing revenue and profitability.”
Looking at the Licensee and Adviser Services division, the company said revenue was up 4.4% to $56.5 million reflecting improved operating performance across salaried advice, corporate finance and the Sequoia Wealth Management broking business.
“Adviser resignations and decisions by certain platforms to restrict new business and reduce product access constrained business flows has impacted the InterPrac business during the period,” it said.
Crole said that the firm’s salaried advice businesses and the broking business of Sequoia Wealth Management have commenced the second half strongly, and growth was anticipated.
“The Legal & Administration Services division maintains positive momentum and is expected to benefit from historically stronger second-half trading. New software is scheduled to be introduced across our SMSF business to further enhance performance in the second half.”
Are Interprac / Sequoia going to pay the 10’s of $$ millions in AFCA complaints ? Even after Macquarie & NetWealth have repaid $420 mill return capital.
Will you use the $30 Million in assets to pay ?
How much will PI pay ?
Or most likely, given Crole has pointed the fingers everywhere but themselves for their massive compliance failures,
Illegally Phoenix everything out of Interprac and dump their crap onto CSLR.
If this occurs, ASIC must do more than previous cases of, pathetic nothing.
If this occurs the Advice profession must do more to make those causing problems to pay.