The proposed entity will be 50 per cent owned by Fortnum and 50 per cent owned by FPSA’s 20 member firms.
The deal is expected to be completed by 31 October 2015, subject to due diligence.
A joint statement by Netwealth and Fortnum said the agreement would “release” Netwealth to focus on providing superannuation, administration and “innovative investment solutions” to financial planners and accountants.
Under the proposed agreement, Netwealth will continue to provide a range of services including platform, managed account, financial planning software and compliance services to the broader Fortnum and FPSA group of 54 principal practices and 130 advisers.
Netwealth joint managing director Michael Heine said the deal would allow his company to “do what we do best, and not be in competition with our business partners”.
“We decided to partner with Fortnum because we wanted a group with the technical, compliance, practice development, business coaching and investment skills to support our advisers, but also a group that shared our commitment to championing a strong IFA market,” Mr Heine said.
“The new arrangement will deliver the scale and services required to meet the needs of professional advisers and their clients in a rapidly changing and highly regulated market,” he said.
Fortnum managing director Joel Taylor said the merger of Fortnum and Netwealth’s FPSA operations would expand Fortnum’s footprint nationally – particularly on the eastern seaboard.
“Netwealth is a leader in investments and administration with a reputation for delivering award-winning solutions, while Fortnum’s strength is high quality and customer-centric advice,” Mr Taylor said.
“Our principal practices enjoy being a shareholder and having a say in the direction of the AFSL but with the added benefit of scale, support and a collaborative relationship with other like-minded advisers.
“We are committed to being a leader in the advice industry and our advisers know any decisions made at the licensee level are solely in their best interests.
“Netwealth have done a very good job in recent years of ensuring they only have high quality advisers in the group; we look forward to working with them in future to continue delivering high quality advice to their clients,” Mr Taylor said.
Congratulations boys on what sounds like a great deal.
May you have great success in your endeavours.
The headline was slightly misleading – we believe this is arrangement cleans out the conflicts, allows respective parties to focus on their strengths, and, most importantly allows a combined Fortnum/FPSA to negotiate better deals on behalf of clients and pass that benefit back to clients.
Ray and myself can’t speak highly enough of the integrity and quality of netwealth + FPSA advisers as this process unfolds. We look forward to working together to give the IFA space the voice it needs to drive competition on a very uneven playing field.
Matt, thank you for clarification and correcting my misunderstanding. My initial comments are therefore too broadly aimed. I apologise to you.
I believe that vertical integration can be an effective model and provide good advice.
Ray Miles was happy to be part of integrated model or part of institution when part of Clallenger and then with ING.
He then got religion and decided all institutions were bad for licensees. His hypocrisy made me angry.
Read the terms Neil: Netwealth is exiting advice. Fortnum is adviser owned, adviser directed, no ownership or influence from any manufacturer dictating terms and importantly; no fat cheques used to ‘buy’ advisers.
Hi Neil, to clarify the situation and remove any misunderstanding netwealth is exiting FPSA and the new advice entity will be 50% owned but the FPSA advisers and Fortnum NOT netwealth. The merger removes conflict and ensures netwealth can focus on activities that champion and support the IFA market. Fortnum will not have any owenrship of netwealth and netwealth will have no ownership of Fortnum or the new advice entity. We believe this is a great outcome for both parties and more importantly the advisers who now have greater control of their future with the support of a large, successful and non aligned group.
I think this will be a good marriage. But where does it leave the June announcement from Fortnum that Colonial FirstWrap was going to be Fortnum’s platform of choice? If it remains their first choice then it negates, to a degree, Neil’s comments about VI.
I wonder how this fits fits in with Fortnum’s June announcement that Colonial FirstWrap will be their preferred platform?
So in what universe is this not an integrated model? A model I have no problem with but one that Fortnum and IFA have criticized? Net wealth does not count as it is not an institution? Is that the logic? This move demonstrates two things. The validity of a number of models including integrated ones. And the hypocrisy of those who criticize integrated models just after they exit one and just before they enter another one.
Congratulations Fortnum and Netwealth. As a member firm of the Fortnum Group we look forward to working together to address the issues & prosper in the exiting times ahead.