Wealth manager WT Financial Group (WTL) announced on Tuesday the acquisition of non-institutionally-owned licensee Synchron, a move that will see it become the largest non-institutionally-owned financial adviser network in the country.
The combined group will boast more than 600 advisers and funds under advice in excess of $16 billion following the acquisition.
The move follows WTL’s acquisition last year of the Sentry Group and continues the listed company’s growth strategy.
WTL will cash out $7.96 million payable over two years in a combination of cash and WTL shares. The wealth manager will, however, assume liabilities of circa $3 million and expects to incur transaction and integration costs of between $1-2 million, bringing the anticipated total value of the acquisition to $12-13 million.
Synchron founders Don Trapnell and John Prossor will continue working in the business, with Mr Trapnell set to assume the role of chairman of WTL’s Synchron subsidiary.
“Synchron has a long and proud history as a licensee that values its people. In the process we have built a strong, close community of advisers with a unique culture,” said Mr Trapnell.
“This is a pivotal moment in our history, one which will allow us to equip Synchron advisers for an exciting future in financial advice, while also positioning us for growth, and ongoing leadership of the industry as a licensee.”
More focus on advisers
WTL’s leadership believes the acquisition will set the course for future expansion and allow for more comprehensive offerings for advisers.
“Thanks to the acquisition structure, the Synchron founders will maintain investment exposure to Synchron by holding shares in WTL as we continue to advance as a leader in the Australian financial advice sector,” said WTL managing director, Keith Cullen.
He said the addition of Synchron’s state manager line will provide significant experience and resources to the broader group to support the company’s advisers across its Wealth Today and Sentry groups.
Mr Cullen also announced the role out of the Synchron’s NextGen program with the aim to support the professional development of younger advisers.
“Synchron advisers will benefit from the rollout of WTL’s adviser education and training programs, its comprehensive practice management tools and programs, and its enhanced risk management framework,” he said.
“The landscape within the financial advice sector has a strong outlook, and the synergies created from the Acquisition position us for further growth.”
Another AFSL moves away, Don and co take some money off the table but more importantly no longer need to be concerned about ADIC, AFCA and the other regulators imposing remediation or hitting them for compensation , soon there will be no advisers left, or any one brave enough to hold an AFSL in this environment. Of the top 10 AFSL holders 10 years ago how many are left, almost all have walked away from the costs and risk
I wonder whether that sale price includes or excludes any provisions for future advice remediation?
Could be a reasonable purchase price, or very very expensive.
There is a provision for remediation within the total price.
I hear too many people express cynicism about deals such as this (advisers lean towards cynicism having been everybody’s whipping boy for 20+ years) but as the banks (and their balance sheets) have exited the scene, we need licensees to consolidate and innovate new profitable business models. It’s that profitability that will be the financial strength required to remediate clients if ever needed. Unprofitable licensees or those that are running on the smell of an oily rag are not good for client’s, advisers or the sector as a whole.
This might be a contrarian view, but I think this is a good deal for the industry, for advisers and ultimately clients.
Yes it would be good if licensees could innovate. I have experienced WTL methodology and unfortunately it is not new or innovative. However watch out for some of the fintech aligned licensees. These guys are really making going to make a difference for both advisers and clients. Technology is going to be a large part of the solution.
Why have they sacked so many key staff in compliance since acquisition
The ticking time bomb has shifted. There is a reason why many licensees do not accept anyone coming out of synchron. Now the whole group has been purchased. How are this new licensee at sweeping compliance issues under the carpet I wonder? I guess time will tell.
Let’s assume that’s true (there certainly are plenty of prejudices within the advice space), it says more about the licensee than Synchron. It means that the licensee is not confident in their monitoring, supervision and training systems to be able to take on an adviser that possibly might need some “corrective” work.
The sector has been engulfed in safetyism for far too long. There are many reasons for this, least of which is the professional compliance class that runs the sectors compliance bureaucracy having virtually no appetite for any risk/pragmatism and over interrupting laws and regulations.
As for sweeping issues under the carpet…not sure what that carpet looks like anymore. Industry culture post Royal Commission has certainly adapted, I doubt you will find much of that “sweeping” dynamic anywhere anymore and the “carpet” is so small now to be irrelevant.
Yes, I guess time will tell, but I’m optimistic that this deal helps the sector.
At what point do you become an “institution”. I would have though they would have passed that threshold
Wow, at least the banks had deep pockets and refunded clients where needed, can’t see that happening in this train wreck waiting to happen. Wealth Today combined with DOLR Synchron will not end well
“non institutionally owned financial adviser network” 🙂
Another advice business with product in the mix. I thought this was generally considered undesirable in the industry having brought other advice groups undone through the RC with several instos divesting their advice business.
Instos like AMP and IOOF are still very much reliant on their “advice” businesses to sell inhouse product. While nearly everybody agrees it’s undesirable, geriatric Hayne gave it the green light. He somehow thought consumers would be better off if small, independent, advisers were drowned in even more bureaucratic paperwork, than if product companies were restricted from controlling advisers.
The reason banks got out of personal advice was to protect their much larger core banking business from potential regulatory or reputational risks. Vertically integrated advice/product companies without significant banking operations to protect, such as AMP, IOOF, Dixons, Centrepoint, Easton, WT, etc are happy to take those risks. The risks didn’t pan out for Dixons in the end, but others are happy to carry on with similar models while they can.
Don and John leaving the “family” behind.
There was never a family. That was all a facade. Purchasing Sentry and Synchron in under a year, what ever could go wrong #popcornready:lol:
Get out of debt card for the founders of Synchron. WTL are assuming $3m of Synchron debt using their own debt plus 50% of up to $2m in warranties. Not only that the founders are being given a bundle of cash to remove all of these potential liabilities . Trapnell wins salesman of the year with this deal
I agree , I feel sorry for the old Sentry owners and shareholders who are now caught holding paper in this lobster pot of a company.
The Sentry owners obviously saw value in the acquisition. The board and senior management of WTL include now include the owners of Sentry. Look at the board/senior management that’s being amassed, some pretty serious players/experience, and with significant skin in the game. The Sentry guys bring a lot of value to the table and they did a pretty good job of creating shareholder value with Shadforth in the past. Different times definitely, they don’t seem like a bunch of dummies though.