Yellow Brick Road sells advice business

The advice business of Yellow Brick Road will be sold to a boutique investment house for approximately $2.5 million as part of a “strategic pivot away from wealth management”.

Yellow Brick Road entered into a sale agreement and strategic alliance with Sequoia Financial Group in relation to the head office operational and business functions comprising its wealth division YBR Wealth, according to a statement to the ASX.

The agreement is expected to complete early this year following the transfer of advisers and finalisation of other implementation aspects of the transaction.

The total purchase price will be approximately $2.5 million if all YBR Wealth advisers transfer on completion, otherwise the purchase price will reduce pro rata for any non-transferring revenue streams, YBR said.

Further, other potential adjustments may be made to the final purchase price depending upon whether:

  • The YBR Super book is ultimately included in the transaction;
  • Any advisers are terminated by Sequoia Group during an 18-month period post-completion; and
  • The expected income of Sequoia Group from the books of any transferring advisers is reduced by any failure to comply with law prior to completion, the risks of which remains with YBR.

YBR Wealth’s share of the rights to the recurring revenue streams derived from its wealth advice and life insurance distribution businesses will be sold to InterPrac, a wholly owned subsidiary of Sequoia Group.

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Under the agreement, YBR’s current advisers will be licensed under InterPrac Financial Planning following each transferring adviser entering into a new agreement with Sequoia Group and completing an onboarding process.

Advisers who transfer to Sequoia Group will continue providing advice and services to their existing clients and will retain their rights to income from their client books, YBR said.

YBR said advisers under YBR Wealth who don’t transfer to Sequoia Group will be assisted in selling their rights to income from their client book to other transferring YBR Wealth advisers or other advisers in the Sequoia Group.

In addition, YBR and Sequoia Group have reached a cross-referral agreement. Under the agreement, Sequoia Group will act as the preferred referral partner of advice and services for YBR’s mortgage broking network, and YBR will be the preferred referral partner of mortgage origination advice and services to the Sequoia Group.

“The decision to exit the management of YBR’s wealth business was driven by YBR’s recent strategic pivot away from wealth management, in which it lacked scale in an increasingly regulated environment, to focus on the mortgage market,” said YBR executive chairman Mark Bouris.

Yellow Brick Road sells advice business
Mark Bouris
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Adrian Flores

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].

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