After six years with the IOOF-owned Winchcombe Carson dealer, the Investor Wealth business this month began trading under its own licence. But this was no typical dealer/adviser relationship breakdown. Investor Wealth principal Gareth Bradly explains the reasons for the amicable split.

The Investor Wealth office is frantic. The activity level has been particularly high in the Melbourne-based financial planning business since the group took up its own licence a little over a fortnight ago. Gareth Bradly, one of Investor Wealth’s four principals, says, as with any other major change, there is still some settling down to do but the move to a newly-independent life has been remarkably smooth. Bradly says the four Investor Wealth financial advisers had been planning the switch for over a year but the decision to jump from into self-licensing was not driven by any disgruntlement with their former dealer group, the IOOF-owned Winchcombe Carson. “There were many reasons for taking up our own licence but ultimately it was the focus on tied advice from the regulator, media, clients and our referral networks that prompted the move,” he says. “Rightly or wrongly people looked at the Winchcombe Carson banner and the IOOF ownership and questioned the advice. We were actually comfortable with Winchcombe Carson and the IOOF product and platform but we believe customer sentiment has shifted and we wanted to be able to demonstrate our choice of product through our own licence arrangements and our own investment menu.” The predicament faced by Investor Wealth is typical of many in the industry as pronouncements from ASIC and media pressure force financial planners to either justify their links with institutions or divorce their dealer. The just-released FPA conflicts of interest principles will also add fuel to this fire. Over the last two years Bradly noticed a marked increase in questions from clients and their referral networks of accountants and lawyers about the IOOF ownership issues, a topic which rarely came up when the business first launched six years ago. “We still have a good relationship with IOOF and Winchcombe Carson and they understand our reasons,” Bradly says. “But we saw the risks of staying with them and realised we had to do something about it.” Accepting responsibility for all your actions, however, is not something to be taken lightly and Winchcombe Carson cushioned Bradly and Investor Wealth from the full brunt of legal compliance and dealer back-office requirements. Bradly says the principals realised if they were to break free they still needed to be provided with the support and services available at a larger dealer group. “We had to be careful not go straight from black to white and ensure that we accessed scale benefits and corporate support as a small licensee,” he says. Investor Wealth chose Paragem to manage the transition process and ensure the group would not be left floundering under the compliance burden of an Australian Financial Services Licence (AFSL). Paragem, the business started two years ago by former Sealcorp chief, Ian Knox, packaged up all the services Investor Wealth required to operate, including: scale access to research; front-end software; paraplanning services; compliance and; business management and marketing support. Knox says with 300 AFSLs and over a 1,000 authorised representatives already using Paragem the business can pass through scale benefits when pricing its services to practices such as Investor Wealth. “We’re also in discussion with Investor Wealth about how to improve their operating efficiency including their platform needs,” Knox says. Paragem is processing about 50 licence applications suggesting there are many financial planning practices in the same situation as Investor Wealth. Investor Wealth still uses the IOOF platform and Bradly says while this will continue to be reviewed for market competitiveness, there are no immediate plans to change. He says it is important that competition continues in the platform world and sees an important role for that part of the industry in driving down the fees charged by wholesale managers. “A lot of fee pressure has come on advisers and platforms and I think the wholesale managers will be the next to feel it,” he says. For the time-being Investor Wealth has been through enough transition but the group will be considering other changes over the next year. For example, the four principals in the business are considering whether to corporatise their practices. At the moment the four operate as separate entities even thought the back-office has been merged. “We’re leaning towards the corporatised model but we haven’t decided yet,” Bradly says. The group also wants to expand and again is not sure whether to expand by bringing on authorised reps or employing financial planners in a corporatised business. Paragem is also helping Investor Wealth with its expansion plans. While the change process is certainly not over for Investor Wealth, Bradly says the principals don’t want to rush any further decisions. “Ultimately we want to keep a good client relationship,” he says. “However the business evolves that principle has to be our number one priority.” Name: Gareth Bradly Business name and location: Investor Wealth Dealer name or self-licensed: Self Number and designation of staff: 4 Planners (all directors/partners), 1 Para-planner, 1 Office Manager, 3 admin assistants Area of speciality: Retirement Planning Relevant qualifications: Diploma Financial Advising,Graduate Diploma in Applied Finance and Investment, AFPA Are you a member of the FPA?: Yes Number of clients:1,200 in practice?: Funds under management (or funds under advice:$200 million Method of fee collection: Fee for Service/% FUM Investment platforms: IOOF, BT Wrap, CFS Wholesale Front-end planning software: XPLAN Office management software: ACT Investment research: Lonsec Insurance research: Plan For Life Technical and legal support: Paragem, Various Managers Ongoing education provider: Tribeca, Paragem,Ongoing education provider: Tribeca, Paragem,

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