AZ NGA to remain pure advice play
There will be no compulsion for advice practices owned by AZ Next Generation Advisory (AZ NGA) to write products created by its partner Azimut, despite the Italian asset manager expanding into the local funds management sector.
Speaking to ifa, AZ NGA chief executive Paul Barrett confirmed that the advice business would remain separate from Azimut's newly announced funds management arm.
"We have made it clear that we are building a standalone advice company and we have been successful in our first year doing that. So our focus is on them and their growth and profitability. Not sales, and not how to support some other ventures. It's a pure advice business," he said.
"We have changed the game – we've built an end-to-end financial planning entity that stands on its own two feet [and] does not rely on subsidisation from the manufacturer. We don't even have our own licence, so the firms that we are buying have to write the products that are on the approved product list from the entities that they are licensed with."
Last week, Azimut, one of Italy's leading fund managers, announced that it had entered the Australian funds management space by taking a majority stake in Sigma Funds Management.
The deal comes after it was announced in late 2014 that Azimut had established AZ NGA, headed up by Mr Barrett, to acquire Australian financial advice businesses. By early this year, AZ NGA had entered into agreements to purchase nine advice businesses, with the latest being CBA-aligned Wealthwise in March.
Mr Barrett said that Azimut's funds business would have a different board, reporting lines and personnel, and emphasised that advisers would never receive any incentives for writing business to Azimut's products.
Further, Azimut does not yet have any retail products. "There is no compulsion for anyone in AZ NGA to write products," he confirmed.
"At the first meeting we have with planners, we disclose the overall strategy for Azimut and their aspirations in Australia so, of course, they know that. I have always said publicly we are not a manufacturing business. We are an advice business, so we maintain that."
According to Mr Barrett, Azimut has both funds management and advice arms in other countries, so it was natural that they would want to do both in Australia.
"Azimut are an asset manager and financial planning business and Azimut has aspirations in both of those sectors. The difference in the Australian market compared to even five years ago is that the financial planning activities and the asset management sides are completely separate.
"People are getting at vertical integration and we have two completely separate ventures. I don't get any remuneration from the asset management side of what Azimut do, so there's no direct conflict there. It's a sensible venture," Mr Barrett said.
"Why wouldn't an international asset manager that operates in 15 countries around the world not want to operate in the fourth largest fund management industry in the world and one of the fastest growing?"
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