The report highlighted that a business called AGAT Business that dubs itself “The Superannuation Detectives.” cold calls people and provides a report that recommends they switch their super. They then recommend those people go to Venture Egg for financial advice on where to change their superannuation.
It highlights that customers of Venture Egg have been charged around $5,000 to change $100,000 of super from an industry fund to a high growth retail fund. In some cases claims have been made that the customer didn't speak with Venture Egg advisors before receiving the advice and experienced high pressure sales techniques.
What do we know about Venture Egg? They are licensed through InterPrac Financial Planning. Their website lists only six financial advisors. However checking the internet archive we can see this is a recent change and they had around 19 Australian support staff. Linkedin counts at least 16 staff in the Philippines and around 19 paraplanners in total, for a total of around 35 staff.
And when we look further at linked in, nearly all their employee staff have joined the business in 2023.
That's at least 46 staff (35 + 11) supporting the 6 advisors listed on their web page, most of whom appear to have been added over 12 months. A conservative estimate might be 20 paraplanners (per linked in), 15 other support staff and a team of 11 cold calling leads to transfer to Venture Egg. So a $2 to $3m employee cost on the whole operation.
If as reported by the ABC that Venture Egg is running a super switching factory, and we conservatively estimate each of their paraplanners + support staff are generating 1 super switching SOA a day, at $5,000 for a $100,000 switch, Venture Egg appears it may be generating in the order of 80 to 100 Statements of Advice a week, earning in the ballpark $2 million a month in new advice fees.
That's around $22 million a year, add to that ongoing fees for service and they could be generating in the order of $20 to $40 million a year in revenue between their 6 listed advisors and 46 staff. No wonder they have caught ASIC and the 730 Report's attention. Sounds outrageous that 6 advisors could be generating 30 million of revenue a year.
To go back to Sequoia. Their advisor numbers have increased around 10% over 2023 from around 320 to around 350 and over the same period the market has been pretty flat. So factoring in inflation, you might expect at 15% to 20% lift in revenues.
However when we look at their Licensee Services division their first half revenue by year: Dec 20 $27 million, Dec 21 $32.7m, Dec 22 $31.3m and Dec 23 $50.5m. We can pretty much double these numbers to get annual revenue.
So something happened between December 2022 and December 2023 to increase the licensee revenue by 60% or around $38 million a year. Advisor numbers up 10%, market flat, revenue up 60%.
Venture Egg suddenly hired dozens of staff from late 2022, related investment manager shut down by ASIC, reports from ABC of a super switching factory and Sequoia's revenue's have increased 60% year on year in Licensee Services.
Are Sequoia Licensee Services sudden jump in earnings due to Venture Egg's super switching factory? If not, what's driven the 60 increase over 12 months?
The question has to be, what is this going to cost Sequoia? If ASIC audits Venture Egg and finds widespread malpractice, makes restitution orders and 5,000 customers with $500 million of FUM make claims against Sequoia for lost earnings and inappropriate fees what is the payout going to be? How long will this drag out and what announcement is Sequoia going to make on this?
Have Garry's challengers dodged a bullet by losing the recent challenge?
SEQ Price at posting:
46.5¢ Sentiment: None Disclosure: Not Held
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