A Brisbane-based former Godfrey Pembroke authorised representative has ditched the NAB-aligned dealer group and “vertical integration push” to become self-licensed, though the bank says the practice was "exited".
P3 Financial Planning (P3FP) began operating under its own licence on Monday after being released by Godfrey Pembroke on 31 October.
P3FP principals Jim Penner and Jon Morrow spoke to ifa about the thought process behind the decision.
“We saw Godfrey Pembroke as more of a high net wealth, boutique kind of [dealer group] that had its origins in stockbroking and fee-for-service,” said Mr Penner.
“So we were told it was a good fit, but it just didn’t pan out that way in the long term,” he said.
Mr Morrow said Godfrey Pembroke made P3FP a lot of promises about back-office support, referral arrangements with accountants and fee-for-service business models – but there was not much follow-through.
“Once we got there a lot of these services either didn’t eventuate, were scaled back or were even cancelled in some instances,” he said.
But while the dealer group services of Godfrey Pembroke left a lot to be desired, Mr Penner was quick to compliment MLC's Connect for Growth program.
The internal practice brokerage program allowed P3FP to purchase a book of clients from a former colleague in 2011/2012, Mr Penner said.
Bolting on the additional client book – as well as bringing on the acquired practice's receptionist/paraplanner – set the stage for P3FP to become self-licensed, Mr Penner said.
“We had the size, we had the revenue and we had the profitability where we could be on our own – it was just whether there was a catalyst for it,” he said.
The “vertical integration push” from the big banks was what finally “sealed the deal”, Mr Penner said.
“We decided: ‘Now it’s time for us to be able to control our own destiny, and build what we wanted to build – as opposed to being on the same level as a bank planner,” he said.
After making the decision, Mr Penner and Mr Morrow took on Brett Walker of Brisbane-based consultancy Smart Compliance to handle the licence application with ASIC.
“Brett helped us with the licence, the preparation involved, the documentation and he’s been a really good guiding hand in that process,” Mr Penner said.
The one headache was getting professional indemnity insurance in place that covered margin lending – despite the fact P3FP has barely any margin loans in place and has had a neglibable amount of margin calls, he said.
Three weeks ago the pair employed a practice manager to assist with the ongoing compliance requirements involved in maintaining the new licence.
P3FP has also had “very positive” feedback from its clients about the move to a self-licensed model, said Mr Morrow.
“Clients are really pleased to see us making this move – particularly the story of greater levels of independence ... with our advice and not being tied to an institution,” he said.
“Clients have noted the poor [media coverage] about CBA and Macquarie. They think this move for us is really exciting and they’ve been really pleased for us," Mr Morrow said.
Update: A NAB spokesperson has rejected the suggestion that P3FP's departure from Godfrey Pembroke was voluntary.
"Godfrey Pembroke exited the business and the decision was entirely made by Godfrey Pembroke Limited," said the spokesperson.
The spokesperson was unable to go into further detail, citing "legal reasons".
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