EXCLUSIVE: The chief executive of a listed advice group has unveiled ambitious plans to grow as large as the industry’s biggest institutional players, saying the licensees of the future will become “a service platform” where advisers can pick and choose the level of support they desire.
In an upcoming episode of the ifa Show podcast, Centrepoint Alliance chief executive Angus Benbow said the group was aiming to almost double in size as it looked to make better use of technology and take advantage of increasing adviser demand for autonomy through flexible partnership arrangements.
“Across the business at the moment, we have 308 advisers in our licence and we also have a big presence in the self-licensed market under what was called the AAP network – currently there’s about 140 firms or 800-ish advisers in that community,” Mr Benbow said.
“At the moment when you look at that it’s just over 1,000 advisers in various forms, and we would like that to increase to 1,500-2,000. It sounds like a lot of advisers, but given the way we leverage technology now, we don’t feel that would impact on that sense of community and losing yourself in a bigger business.”
The comments come following similar remarks from IOOF chief advice officer Darren Whereat, who said in December that growing the institution’s newly merged advice business to 2,000 practitioners was “not out of reach”.
Following Centrepoint Alliance’s acquisition of advice technology consulting business Enzumo in June last year, Mr Benbow said the group had been able to leverage specialist capabilities to better automate time-consuming tasks for business owners.
“When we look at Enzumo, they’ve got good clients and a good offering in their own right, but it’s the combination of bringing the Enzumo business together and another 10 people that we’ve got across data, Xplan, and application development, and putting that together as an advice technology solutions group,” he said.
“We’ve got close to 20 specialist people and that gives us the ability to look at regtech in a different way, to look at advice digitisation and onboarding of new advisers.”
Mr Benbow said given the exodus of advisers from the industry in the past two years, further consolidation of mid-tier licensees would be necessary to ensure advice groups gained the scale needed to stay profitable amid rising regulatory expenses.
“It’s well documented that adviser numbers have reduced significantly, but looking at the number of licensees they haven’t reduced at the same rate,” he said.
“So, from a macro perspective, if you’ve got a reduced demand [for dealer services] but the supply side is staying relatively the same, and you’ve got regulation costs increasing, that lends itself to consolidation.”
With this in mind, Mr Benbow said 2021 could be a year of M&A in the mid-tier space, with licensees looking to “get the benefit of scale” through supporting different adviser business models.
“Whether that’s through all being on the one licence, being on multiple licences or leveraging a single service platform, there’s different models that will play out,” he said.
“In the future you could have a licence with 50 advisers but we may do all their compliance, while they are focused on building that peer group community. What we will see is the emergence of different business models and looking at what’s a licence and what’s a service in different ways.”
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