Licensee growth in a time of shrinking adviser numbers

Published 28 September 2021

Fitzpatricks Private Wealth CEO Matt Fogarty

It’s common knowledge that the number of financial advisers in Australia has been in decline since the end of 2018. A combination of natural attrition and regulatory change driving out some who might have otherwise remained, has driven numbers down from more than 28,000 to around 20,000.

A licensee growth strategy that relies on significant growth in adviser numbers in the next 18 to 24 months might reasonably described as courageous. Unless a significant number of licensee close, the process of luring advisers from other networks is going to be hard, gritty work.

But one licensee is thinking a little differently. Matt Fogarty, CEO of Fitzpatricks Private Wealth (FPW), says while licensee scale, measured by adviser numbers, brings efficiencies, it’s not a Fitzpatricks priority.

“We know elements of scale are important, but we’re never going to be a scale player. Strategically that’s not where we’re heading,” Fogarty says.

“It’s not having thousands of advisers. What it means is partnering with quality firms that really want to adopt and support our lead-adviser style of advice.

“We see a smaller number of firms but more advisers in those firms, so bigger, more partnership-based professional services business models. Under our brand, we also see, that as a co-ordinated advisory [firm] with the professional services characteristics, where our role, competency and focus become very different to what it is today.

“Increasingly it will be working ‘in the partnership’ to collaborate and develop what it needs to be successful. Things like talent attraction and management, career progression, keeping the lifecycle of the adviser and the client and the organisation intact across generations, developing intellectual and emotional capital, developing capabilities that align with emerging needs of clients. We’re setting ourselves for that, and we’ve been doing that for a couple of years now.”

“We don’t aspire to bring a lot of firms on every year. It’s all about alignment,
and it starts with culture, value and beliefs”

Matt Fogarty, Fitzpatricks Private Wealth

Fogarty says there are alternative way to achieve efficiencies for functional requirements such as technology, administration or PI insurance.

“I think natural market forces will take over, where it becomes such a commodity or a utility, that there will be true scale players we’ll be able to tap into for our operational benefits,” Fogarty says.

“We don’t see ourselves as having 400 advisers. That’s just not us. If we had 100 or so advisers – and we have 80 now – might that double in 20 years? Maybe. But that gives you a characterisation of how we think about it. We’re interested in partnering. We don’t think about recruiting, we think about partnering and seek to be highly engaged in supporting the ongoing growth, development and success of our partner firms.  We don’t aspire to bring a lot of firms on every year. It’s all about alignment, and it starts with culture, value and beliefs.”

That approach resonates with Fitzpatricks’ advisers, whose satisfaction with their licensee, its services, leadership and support saw it named 2021 Medium Tier Licensee of Year. In the CoreData Licensee Research a medium-tier licensee is on with between 10 and 99 advisers on its licence, and there are around 200 of them currently in operation.

Fogarty says Fitzpatricks doesn’t see itself as a licensee services provider in the traditional respect, but rather as an advice practice with a distinctive advice model, which it supports advisers to deliver.

“We’re trying to really create advocacy and support for that model,” he says.

“We talk about running a lead-adviser business, being a lead adviser, having a really strong purpose, enriching lives of clients. And so, for us, it is continually coming back to context and purpose, trying to continually loop back to our role and the client’s agenda. It’s all about the client getting them financially well organised, on-track, and connected to their goals and aspirations.”

But whether it thinks of itself as a licensee or not, Fitzpatricks is subject to the same stresses and strains that all licensees are experiencing from regulatory change and evolving adviser demands. Part of being a successful licensee is necessarily managing that change effectively.

“We have, like everyone, had to uplift around standards and record-keeping and systems and data,” Fogarty says.

“We are a small enough group to wrap our arms around that and provide
the connection, direction and emotional support needed for our advisers”

Matt Fogarty, Fitzpatricks Private Wealth

“We’ve invested in the business…to do that as quickly and efficiently as we can with as much support as we can provide to the advisers in a practical sense.”

The level of satisfaction expressed by advisers authorised by licensees in the Medium and Large (100 to 499 advisers on the parent entity’s licences) tiers is generally greater than that expressed by advisers authorised by licensees in the top tier, which have 500 or more advisers on the parent entity’s licences. In that respect, Fogarty thinks Fitzpatricks is a good size to help support and guide advisers through industry change.

“Like everyone in the profession – and it’s not just what we were pushing through, on new policies and standards and guidance – you’ve got FASEA exams, you’ve education, you’ve got lockdown you’ve got COVID, costs of doing business are going up…there is a lot of pressure on advisers and their teams to adapt” he says.

“However as a sector we have done it before and I think in the FPW context we are a small enough group to wrap our arms around that and provide the connection, direction and emotional support needed for our advisers”

As Fitzpatricks transforms and grows, even modestly, Fogarty say its challenge is to take the best of what it has already developed over the past 20 years, and move forward in a more corporatised and structured way that aligns to a professional services partnership approach.

“And that’s how we talk about it,” he says.

“We’re in our own transformation, from our original founders and advice leaders to a new team and generation of lead advisers. One of the things we’re really sensitive to and conscious of is partnering, yes, and what that looks like and feels like for the advisers… but it’s partnerships in the context of community.

“If there’s one thing an adviser in Fitzpatricks would say, be it why they have joined the group or why they’ve stayed in the group or why they want to come back, it’s because of the community. We all have our role to play, but it is a really strong, adviser-led community. In fact we have some own AFSL’s who are part of the community given their alignment to the lead adviser model we advocate for.”

“There’s a saying we have in here, about ‘my IP is your IP’.
Advisers are happy to help [each other].”

Matt Fogarty, Fitzpatricks Private Wealth

“There’s a saying we have in here, about ‘my IP is your IP’. Advisers are happy to help [each other].”

Fogarty says that in the objective of creating a national private wealth advisory firm, with recognised characteristics of professional services business, he is pleased that Fitzpatricks’ advisers have shown themselves to be on-board for the journey.

“It’s been hard,” he says.

“Nothing I’m saying is easy. Sometimes when they’re in that vortex of change it’s really hard to see your way through it. This is all about the advisers, their staff, families and clients.

“I reflect and defer back to the advisers and I’m happy that they had a sense that the vision and the purpose and where we’re taking them as a community resonates and is valuable and means something to them, they care about it, and they want it to improve. It’s their community and we’re custodians of it.”

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