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justbyanose

275 Posts.

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27/06/17

09:52

Post #: 25507419
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Originally posted by binwood ↑

I respect this post for the fact that you didn't get emotional and defensive but instead wrote a constructive post to try and counter some of the negative arguments. This helps both you and your fellow posters solidify some of the information in your mind.

In saying this I want to counter a lot of what you have said.

Let's start with the way people are interpreting AR. Every AR under each licencee will not be a client facing adviser. That is simply a fallacy. There will be many AR's who are just RG146 compliant paraplanners. What is the reason for this? Well there is a few but a couple of the important reasons are that it means:
1. Paraplanners can take an active participant role in client meetings (part of the learning process)
2. CFP designation which is seen as professional standard requires a number of years of being an AR (again part of the mentoring process for future pannners)
3. Something as simple as the fact it means a paraplanner can give incidental advice in response to client questions via phone or email when the planner is in a meeting or out of the office.

Let's call this proportion 10% of AR's. This then gives us 360 client facing planners for the sentry network. With $5bn FUM for Sentry this gives each planner an average FUM of $13,388,889.

Now most advisors will have passive/legacy money on their books, i.e clients they don't engage with on a regular basis and may not see for years at a time. Assume this is 20% of FUM (I suspect in big licencees this would be much higher). So we have 80% x $13,388,889 = $11.11m of active money per planner. Now the average $ under management per client is probably circa $300,000. So we then have 37 clients per planner. Let's call it 40.

On average you might do an SOA for 2/3rds of this active client base in any given year. So we will call this 27 SOA's.

Let's also assume that the business is also growing clients at a CAGR of 15% p.a. This means approx 6 new clients per year. Let's say in year one each of these clients receive 2 SOA's as strategies and products are being bedded down. This is another 12 SOA's per year. So we have 39 SOA's a year per adviser. Let's round that again to 40.

Now IAM are saying $250 cost for all back office work from start to finish of an SOA process which is more involved than just the advice doc hence more expensive that $110 inc GST.

So let's say 40 plans a year by 360 advisers by $250. I get $3.6m in revenue. Let's assume overheads are about 25% (probably generous). That means EBITDA of $2.7m. NPAT (based on small business tax of 28.5%) is $1.93m.

So you can see Sentry is not going to go even close to hitting M4. It just isn't realistic at all.

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Thankyou for taking the time to respond. Nice to hear from someone with obvious industry experience which I am the first to admit I do not have.

What I do find difficult to comprehend is by your figures each adviser only has approx 40 clients on average.... this means they see an average of less than 1 client a week. Is that correct ?
Of the quoted 23,000 planners in Australia x 40 clients each is only 920,000 clients getting advice.

If thats a realistic amount then of that is less than 4% of Australians getting financial advice based on 25,000,000.

A big market for potential expansion.

IAM Price at posting: 3.9¢ Sentiment: Buy Disclosure: Held
3 Upvote

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