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justbyanose

362 Posts.

1079

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.

Expand

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

0 Great analysis

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