In its results announcement for the first half of the 2023–24 financial year last week, WT Financial Group said the period was the culmination of a “very deliberate strategy” to shift from a direct-to-consumer focus to an advice network focus through a number of acquisitions to “capitalise on industry disruption”.
The strategy kicked off in 2018 when WT Financial acquired Wealth Today, followed by Sentry in 2020 and Synchronic in 2022.
According to managing director Keith Cullen, the group’s acquisition of Millennium3, which was finalised in December last year to just squeak into the half-yearly numbers, marked the final step in reaching the level of scale necessary to “properly underwrite all of the support structure and all of the intellectual property that practices need in this modernised profession”.
“We’ve achieved that scale now,” Cullen told ifa.
“So, it’s not necessary for us to continue to acquire practices, and we can grow our profitability through helping our practices grow, because of that alignment that we’ve got with them through the revenue sharing arrangements.”
This, he said, is a “key differentiator” for the way that WT Financial works with its advice practices.
“I know a lot of groups have gone down a fixed fee approach, but that’s not us,” Cullen said.
“With the vast majority of our practices we’re participating in the revenue, which makes our upside aligned with theirs and makes our goals aligned with theirs, which is to help them make them more revenue and make them more profitable.”
He added that the fixed fee model is one that doesn’t make sense from his perspective.
“If I’m an adviser, I want my advice network to be cheering me on to do better,” Cullen said.
“If you’ve gone to a fixed fee basis, the only way you improve your profitability is by cutting your costs and cutting services you’re providing the practices.
“Whereas we can invest in services and invest in helping practices grow, because when that happens, our margin grows, because we’re sharing in the revenue upside with them.”
Another factor in driving WT Financial to shift its focus to an advice network is the positive outlook for advice firms over the next decade.
“We think practices have got a really fantastic five or 10 years ahead of them, where you’ve got this real restriction in supply of advisers and you’ve got an increase in demand and more and more people coming into retirement,” Cullen added.
“So, we want to help them from every angle with that process and help them really take advantage of those tailwinds that they’ve got out of that supply-demand imbalance.
“Our focus is to help grow the practices in the group by and in turn enjoy better margin and better profitability out of it.”
