Hood Sweeney Securities has found a way to dispense with the services of master funds and wraps by creating its own administration system using Xplan. Partner, Matthew Rowe, explains why in-house admin is easy.

Matthew Rowe left the National Australia Bank in 1998 and set up his own financial planning practice under Challenger-owned dealer group Garrisons. In 2001, the business became part of Adelaide-based accounting firm Hood Sweeney. It gained a planning licence and was renamed Hood Sweeney Securities. Today Hood Sweeney Securities has 10 staff including six full-time financial planners, and close to $250 million under advice. Rowe, 37, is one of four partners in the Hood Sweeney Group, which consists of four business divisions: accounting, finance, wealth management and technology. The group brings in $8 million in revenue a year of which accounting represents $3.5 million and financial planning $2 million. This calender year, Rowe expects revenue from financial planning will be on par with that from the accounting business. In 2005, Hood Sweeney Securities wrote $70 million in new fund flows and is on track to do the same this year. By 2010, Rowe expects FUA will be up around the $400-500 million mark. The average client has $400,000 in investable assets and invests in a range of direct wholesale, managed funds and direct shares. The group does not use platforms, but licences front-end software provider Xplan for portfolio administration and financial planning tools. “We’ve replaced the need for a master trust or administration platform with Xplan,” Rowe says. “We were starting to get disillusioned with the platform industry for a number of reasons, namely, poor reporting and a high error rate but especially the high fees.” Rather than access wholesale funds via master trusts, Hood Sweeney buys funds direct from the manufacturer. Some funds have a $25,000 minimum investment while others may have a $50,000 minimum. In any case, most managers are happy to deal with Hood Sweeney directly, Rowe says. The group’s Managed Portfolio Services (MPS) is a badged version of Xplan and uses the Macquarie Cash Management Trust as a cash hub. Generally speaking, each client holds a Macquarie Cash Management account, which supplies a data-feed to Xplan in order to monitor all transactions, income distributions, payments and contributions, and bookkeeping. Portfolios are invested in a combination of unit trusts and direct shares, and the MPS gathers all buy and sell information such as sale price, brokerage and GST. A data-feed via Xplan is conducted overnight and the next day all trades are in the client’s portfolio. Only $80-$90 million of client funds is in master funds. “Where possible we have moved money out of master funds, but for a number of reasons, such as tax, that’s not always possible. All our new clients are on our internal portfolio service,” Rowe says. “We are not a funds manager because we use managed funds, but we have replaced the master trust. Our process doesn’t work for everyone, and is beneficial for those with higher account balances.” Based on Hood Sweeney’s own research and calculations, it is worthwhile to keep administration in-house once a client has more than $300,000 under management. For clients below that, “it may be more cost-effective to be in a platform,” Rowe says. “If you have the infrastructure, it’s more cost-effective for the client. It’s flexible, has a transparent fee structure and it doesn’t cost a lot to run in-house.” Name:Matthew Rowe Business name and location: Hood Sweeney, 110 Hutt Street, Adelaide SA 5000 Dealer name: Hood Sweeney AFSL 220897 Number and designation of staff: 10 staff in the financial planning and wealth creation business including six full time advisers. Relevant qualifications: Bachelor of Economics, Graduate Diploma in Accounting, DFP, Certified Financial Planner (CFP) and CPA Financial Planning Specialist (FPS). Are you a member of the FPA?: Yes Number of clients: In total 350 including 100 personally. Funds under management: (or funds under advice): $250 million in total Method of fee collection: Fee-for-service using time sheets Investment platforms: No preferred platform Front-end planning software: X-Plan Ongoing training provider: Tribeca

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