Aligned model under pressure as MLC exits continue

The comments came as the group picked up a key advice practice from MLC in the fallout of the wealth giant’s acquisition by IOOF in August. Ascent Wealth, a previously Godfrey Pembroke-aligned firm headed by ex-FPA director Mark O'Toole, announced it would move to the Countplus-owned Count Financial following the acquisition.

Speaking to ifa prior to the announcement, Countplus chief executive Matthew Rowe raised questions about the viability of the institutional model in the advice industry going forward, and said practitioners would be looking for licensees that were increasing, rather than reducing their investment in advice.

“Vertically integrated businesses [are] still legal but whether it’s the right thing to be doing or not, that’s another topic of conversation,” Mr Rowe said.

“We are about trying to run a clean model, it’s purely user-pays and a focus on fee for service.”

Mr Rowe said while large aligned players still remained in the sector, time would tell whether the business model was ultimately sustainable.

“AMP and IOOF will be there, [but] whether they survive or what they look like, who knows,” he said.

“I think AMP is in a bit of trouble and my only comment about IOOF is it’s a big acquisition they’ve made and they’ve paid a lot of money for it, so they’re going to have to make it work. 

“They’re going to have to find a lot of cost synergies and expenses to be stripped out of the business at a time where we’re actually investing heavily in the business around capabilities and what advisers will need to be sustainable.”

Announcing his decision to join Count on Wednesday, Mr O'Toole said the group had presented an offer that included plenty of support and resources to help his practice be more efficient.

“Count Financial is running a clean model which has clear separation between product and advice – which is how we believe the best client outcomes can be achieved,” Mr O'Toole said. 

“They also have a strong balance sheet and have invested in robust compliance and technology systems to enable us to better deliver quality advice to clients.”

Count Financial noted it had recruited more than 50 new advisers since January. However, this came on the back of a significant reduction in numbers as the previously CBA-aligned group transitioned to CountPlus ownership, with its adviser numbers almost halving from 413 in December 2018 to 241 in November this year.