Alliance offers back-office support

Independent adviser businesses struggling to stay afloat amid increasing administrative requirements are being given an opportunity to outsource more of their back-office functions.

Tuesday, August 4th 2015, 6:00AM

by Susan Edmunds

Hawke’s Bay financial advice firm Stewart Financial Group launched Boutique Advisers Alliance this week.

Four other groups have joined so far but executive director and general manager Nick Stewart said he hoped that would grow to 20 over the next five years.

“The Stewart Group business has been around for quite a long time in Hawke’s Bay and is a fiercely independent, fee-only business on the wealth management side. A number of our adviser colleagues with the same value alignment have asked whether it would be possible for them to use some of the processes and tools we have developed."

The Boutique Advisers Alliance administers portfolios via a discounted Aegis investment platform and offers access to an investment committee, customer relationship management software, research, modelling and multi-factor reporting. “All the things you would expect in a business that supplies a support service to advisers,” Stewart said.

He said the Alliance would be careful who it brought in and was adopting more of a co-operative than corporate structure.

Many advisers were struggling with the administrative side of their businesses, he said.

He said since the IFA estimated the cost of being an AFA at $21,000, there had been more requirements placed on advisers, such as the need for a full investment committee for a DIMS licence.

“Without scale it’s difficult to be able to do some of these things. It’s very difficult with $10 million [under management] to establish your own investment committee, get a DIMS licence, run it well and be profitable.”

The cost of the service would vary depending on the services an adviser business required, Stewart said, but there was a fee cap in place to avoid penalising advisers as they grew their businesses. He did not want to reveal the cap, citing commercial sensitivity.

“If we can help clients become more successful there is no reason for us to be earning more and more as they grow. If they grow from $20 million to $200 million and there is no fee cap, why wouldn’t they leave and set up on their own? We want to be in business with them for the long term.”

Stewart said the Alliance would allow member advisers to get on with their business. “They can achieve their goals and objectives… which are likely not to be an expert compliance officer who moonlights on the side as an adviser which is kind of where it has got to and it’s a real shame. My father started in financial advice in 1974 and when I look at the way he ran his business and how it worked when I was a child, it’s very different to being an adviser now.”

Tags: DIMS financial advisers