Speaking to ifa, Sentry executive chairman and CEO, Murray Hills, said the dealer group is focused on acquiring a number of businesses throughout the year, but any institutionally-aligned practice that enters the network will need to be “reprogrammed”.
Mr Hills said the key areas in which this will need to happen concern the use of wider approved product lists, and a focus on more realistic business operating costs.
“[With a wider APL] this requires extended appropriate adviser research and product knowledge, which in many cases was different and broader to that experienced at their previous licensee,” he said.
He added that these advisers will also have to learn they will no longer have a ‘buyer of last resort’ (BOLR) when they decide to sell their business.
“Where there is no pre-agreed fall-back valuation, as in BOLRs, the price will be decided by the open market, and there will be no premium paid for revenue earned by a particular product supplier – the factors are more general and more to do with demographic, geographic and client service history,” Mr Hills said.
“They must learn to prepare for future succession and create real value in their practice to achieve the best price in an open marketplace.”
With 165 practices currently, comprising 239 advisers, Mr Hills said the dealer group has a target of growing by 33 per cent over the next three years.
He also highlighted that the WA-based dealer group’s future growth aspirations include moving into the eastern states.
“We have the largest market share of non-aligned practices in WA, so we are targeting acquisitions on the east coast where we see the greatest opportunity for more scale in the near term,” he said.
“It just so happens that the east coast is where a number of groups have stalled with organic growth because of the proliferation of small to mid-sized competitors in the same space.
“We present them with the opportunity to sell or merge with a larger, better-resourced group in the non-aligned space with like-minded goals and objectives,” Mr Hills said.
In December 2015, Sentry announced that it was undergoing a business restructure to better handle the “rapidly changing” financial services industry.
Sentry would be better served looking after existing advisers as opposed to trying to grow by 35%. Dealer groups like Sentry are some 10 years behind the eight ball and whilst fund managers and advisers have reformed and reshaped their businesses many dealer groups are still living in the eighties.
Some dealer groups would be better off looking after their existing advisers as opposed trying to grow by 33% per year. This Press release highlights how different the views of advisers are to dealer groups.Focus on looking after existing advisers dealer group heads.
Does this mean that the emerging financial planning profession is taking steps to ultimately progress towards an individual licensing model?
Is the writing on the wall for institutional licensing of individual PROFESSIONAL Australian financial advisers?
Yeah – they will rush to join that group.