Next two weeks of wealth results will colour licensee consolidation

Mike Taylor

Managing Editor/Publisher, Financial Newswire

14 February 2023

Financial results to be announced by multiple financial advice licensees over the next two weeks may well prove to be a precursor to further consolidation in the Australian wealth management sector.

It is now six months since Diverger withdrew its $65 million bid for Centrepoint Alliance but with Centrepoint due to release its first half results on 23 February and with Diverger due to announce its results a day later, there will be plenty of attention on their relative performance.

The Diverger bid for Centepoint, lodged in June last year, surprised many in the market because it was considered that Centrepoint, equally, might have made a similar bid for Diverger.

In the end, Centrepoint opted to plot its own path.

At the same time, there will also be attention on CountPlus in circumstances where its share price looks comparatively cheap.

Even the usually resilient Fiducian Group has posted a decline in profit, announcing to the Australian Securities Exchange (ASX) yesterday that it had experienced a 17% decline in net profit to $5,544 million much of it influenced by the company’s acquisition of Peoples Choice Credit Union.

Front and centre of conjecture around the future of the mid-sized publicly-listed financial planning licensees is the make-up of their shareholdings with Thorney Group holding 19.99% of Centrepoint and the Commonwealth Bank’s 36% stake in Countplus.

The Commonwealth Bank has previously stated that it will, at some time, be moving to exit its Countplus stake, with most people believing this will occur when it has completed the remediation process associated with its sale of Count Financial Limited to CountPlus.

In the meantime, there will also be plenty of attention directed towards AMP Limited when it releasers its full-year results on Thursday, with the key question being about how much progress has been made by the company with respect to achieving break-even within its financial planning business.

There will also be plenty of attention directed towards Insignia Financial and the profitability of its financial planning businesses.

Insignia as recently as late January reported that it maintained active advice relationships with 1,525 advisers as at 31 December, last year, representing a reduction of 45 advisers over the quarter, primarily from the self-licensed channel.

It said the integration of MLC Advice into Bridges and subsequent reshaping of the service proposition was anticipated to result in a short-term revenue reduction as low fee-paying clients are moved off fixed-term service agreements.