Sequoia profit soars as big banks exit

Announcing its FY21 results to the ASX on Friday, the group reported a full-year increase in net profit before tax of 138 per cent to $11.5 million.

In referencing their success, the group cited strategic acquisitions across their businesses as having improved their scale. This has allowed the firm to support more sustainable operating cash-flow margins.

Looking forward, the group has stated the growth seen is consistent with their longer-term target to reach $400 million in revenue by 2025 at a target operating cash flow margin above 8 per cent of revenue.

The performance of the wealth division has contributed greatly to Sequoia’s success. The increase in net profits before tax in this division alone has jumped from $2.93 million to $6.12 million between the FY20 and FY21 ends.

The company has stated that their scale in this area, through the provision of over 400 advisers, has permitted more competitive pricing and a greater practice development and administrative support offered to their adviser clients.

The group highlighted that the closure of many banks and insurer-owned advice groups has only heightened the power of their scale compared to their competitors.

With the firm expecting this to continue for two to three years, Sequoia speculates that it will continue growing as an attractive prospect in the financial advice space. The group stated its goal is to provide licensee services for up to 8 per cent of the overall advice market by 2025.

Key to this objective will be Sequoia’s future growth initiatives. The firm aims to continue acquiring mid-tier licensee services businesses, and to provide licensing services to 1,000 advisers by 2025.

The firm expects that total adviser numbers in the industry will drop to 13,000 by 2025, down from over 30,000 in 2018.