Family planning: Snowball’s singular planning vision

This March the listed financial services firm Snowball consolidated its various financial planning firms under one brand and is working non-stop to streamline its advice model for middle Australia.

Outlook Financial Solutions is “not a dealer group” in the traditional sense insists Tony McDonald, Snowball chief executive. Rather than a motley collection of financial planning practices held together by corporate lawyers as per industry standard, Outlook is composed of individuals who “all fit the family photo”, he says. The ‘family’ until recently, however, were divided in a very fundamental way – its members did not share the same name. In March Snowball rectified the problem when it rebranded the four financial planning firms it owned outright – CIS, Dunhill, Aspire and what McDonald refers to as “the old Outlook” – as Outlook Financial Solutions. Uniformity is crucial to Snowball’s financial planning model, which unlike the majority of financial advice businesses is not fixated on the high net worth individual. McDonald says Snowball’s aim has always been to supply efficient financial planning services to average Australia as well as mainstream high net worth clients. Snowball has built up its business to date chiefly through close relationships with “affinity partners” such as corporate and industry funds as well as credit unions. Outlook provides its affinity partners with a range of service options from a pure advice back-office function through to the complete financial planning package delivered by Outlook advisers. “We let affinity clients choose how they want to deal with us,” McDonald says. Dealing with industry and corporate fund clients does put pressure on the advice model because this market tends to be a low-balance, high-volume game “we need to guarantee everybody will get the same level of service in the same way at the same price”, he says. “We need uniformity – so we chose to move away from the ‘dealer group’ model where you have authorised reps to a salaried model, where all advisers are on the same pay structure and operate under the house rules.” The salaried model is a little unusual for a planning business the size of Outlook (which currently boasts 23 advisers) but Snowball sweetens the deal by offering its advisers equity in the listed entity. Snowball turned a net profit after tax in the 2005/6 fiscal year of almost $2 million and also announced an intention to pay its maiden dividend. Outlook also has links with the Queensland Teachers Credit Union, which employs six financial planners but uses the Outlook process and is also 25 per cent owned by Snowball. It also works closely with the Western Pacific dealer group in WA, South Australia and Queensland. Western Pacific owns almost 20 per cent of Snowball and the two may be edging closer together. McDonald also hasn’t ruled out further acquisitions as well as organic expansion for Outlook. “The aim is for Outlook to be in every nook and cranny of the country,” he says. While McDonald is keen to play down the dealer group tag Outlook does provide the services expected of an Australian Financial Services Licensee: platforms; compliance; training; research; and the like. It has also devoted a lot of its energy in providing efficient back and front-office technology for its advisers – a factor perhaps even more important for Outlook than most other dealers given its target market. Snowball has always had an interest in developing software to improve the financial planning process and even secured a $500,000 grant several years ago to build a set of automated advice tools. While the project was successfully completed Snowball eventually abandoned its plans to sell the tools in their own right to industry and corporate funds. “We found Australians require some form of human validation before they engage with financial planning,” McDonald says. “The tools have morphed and now that technology and thinking is becoming embedded into our financial planning process.” Craig Raits, a senior adviser at Outlook, says the group is now working closely with Xplan to systematise the advice process. Raits is the adviser representative in charge of Project MORE (Make Outlook Really Efficient) which is taking the basic Xplan financial planning and office management package and “bolting on” the processes and workflows developed in-house. He says the aim is to build a flexible as well as efficient system which Outlook advisers can use according to their own operating methods and the kind of client they are dealing with. For example, some planners may type their own file notes directly into the system while others might hand write and then scan their notes. “In the last six months, relative to industry, we’ve made giant strides in getting the tiered advice model right,” Raits says. “Relative to where we want to be though, there’s still a way to go. We’re never satisfied, there’s always scope for continual improvement in our minds.” Outlook is also constantly on the lookout for new investment products that suit its clientbase and is currently weighing up the potential of the Merrill Lynch separately managed account. At the same time it is refining its more traditional model portfolios and has contracted John Parrish of the Counterpoint consultancy to update them. The group is also interested in discovering the ‘next-generation wrap’, wherever that may come from, according to McDonald. He says that might be something developed by an industry fund or one of the established retail master funds. “Potentially it could be an Xplan type virtual wrap,” McDonald says. “We’re happy for anyone to step up to the plate.”