Bennelong Wealth Partners: An Introduction

Transcription

1 Wealth Partners: An Introduction

2 The Story The Group is a privately owned funds management and private equity business founded by Jeff Chapman and his family in It has global reach with core Australian businesses operating alongside businesses in London, Europe and Asia. The Group also operates as a single family office with deep networks throughout Australian and international global family offices. The Group has channelled the entrepreneurial energy of its founder and Chairman Jeff Chapman to build a strong and successful presence in both the funds management and private equity markets. The Group includes a funds management business with approximately $6 billion under management and a property business with more than 30 golf courses across the UK, along with a wealth management advisory subsidiary, a private equity enterprise and the Foundation. Funds Management s achievements have been well-recognised within the Financial Services industry: in 2012 the Australian Equities Fund won the Australian Equities Large Caps Manager of 2012 award at the Professional Planner / Zenith Fund Awards, and was a finalist for the same award in 2013; and sister fund, the Kardinia Absolute Return Fund won the Australian Equities Long/Short Manager of 2012 and the Australian Equities Alternative Strategies Manager of 2013 at the same awards. "The Group has channelled the entrepreneurial energy of its founder and Chairman Jeff Chapman to build a strong and successful presence in both the funds management and private equity markets" Jeff Chapman and his wife Carena established the Foundation in 2002, setting up the Foundation as the core beneficiary of the Group and its associated businesses. This enables the Group and the wider family of staff, clients and partners to contribute to positive and lasting change in the community and to drive long-term investment horizons for the Group, thereby prioritising preservation of real capital and investment stability. As a result of its success, the Group attracts the highest calibre of professionals to all its business facets. Executives and staff possess a wealth of experience and share a passion for innovation and success and a commitment to all round excellence.

3 The Group Structure Foundation Group Funds Management Wealth Partners Private Equity Property Investment Australian Equities Partners Long Short Equity Management Avoca Investment Management Kardinia Capital Crown Golf Crown Content Aurora Media Worldwide Property Management Wealth Partners: An Introduction 3

4 The Group Approach The Group combines its essence of private ownership and entrepreneurialism with the highest public governance and compliance standards. Its Board of Directors includes experienced, independent non-executive directors. The Group and its businesses operate within a professional, corporatised structure underpinned by a strong capital base. The Group has a rare and proven track record of effectively building, operating and growing boutique businesses. Its network of businesses is able to leverage in-house management expertise, governance structures and peer networks to facilitate growth, generate new business opportunities and build long-term success. Its philanthropic heritage, combined with the Group s core values of honesty, competitiveness, teamwork, prudence, balance, respect, accountability and hard work, drive a spirited but understated culture. We value: honesty, competitiveness, teamwork, prudence, balance, respect, accountability, hard work 4 Wealth Partners: An Introduction

5 A Gap in the Wealth Management Market A combination of market conditions, including an aging population, compulsory superannuation and SMSF growth, are currently contributing to significant growth in the high net worth and ultra-high net worth investor segments. Australia s high net worth population is valued at approximately $625 billion and has increased 15.5% and 15.1% in size and value respectively from with revenue forecast to grow at an average of 7% to The Group has identified this market growth as an opportunity to capitalise on its investment expertise and skill at building and growing boutique businesses by launching a wealth management and advisory group. The Group has also recognised that many of the needs and preferences of Australia s highest performing wealth management advisers and their high net worth clients are not being met as effectively as they could be. There is an opportunity for the Group to partner with a select group of wealth management advisers and boutiques to address these opportunities in the market. Some of the challenges that are driving opportunity for the Group include: Lack of independence: A large proportion of the wealth management industry is consolidated and owned in part or whole by major players who typically have tied distribution channels. Limited freedom and flexibility: In-house products feature heavily on Approved Product Lists (APLs). Advisers have limited access to an open architecture that allows them to source and recommend products outside the APL or to reject participation in capital market transactions in response to specific client needs. Limited product shelf: Not all licensees consistently offer a full product shelf covering multi-asset class and platforms, and the opportunity to expand the APL is limited. Limited access and support for advisers: Direct access to in-house specialists and client and prospect events is often determined by adviser revenue and FUM, as is the focus of senior management. Limited genuine access to dedicated philanthropic, not-for-profit and family governance services: In some cases, philanthropy, not-for-profit advisory, governance and foundation administration are claimed to be offered, but can rarely be fulfilled. Regulatory change: Inconsistent FOFA solutions for advisers and clients across the industry present ongoing challenges for advisers. High cost structure: Advisers face increasing cost to income ratios due to increasing costs of business and limits imposed on business growth potential. There is an opportunity for a bespoke wealth management group to offer high net worth advisers the flexibility, confidence and accessibility they need to build a boutique wealth management and advisory business servicing high net worth clients, without being constrained by tied distribution channels. None of the Group entities have tied distribution arrangements. 1 Capgemini LorenzCurve Analysis IBIS Financial Planning and Investment Advice in Australia. Wealth Partners: An Introduction 5

6 Introducing Wealth Partners In response to the high net worth sector growth and increasing market demand the Group has launched Wealth Partners, a boutique wealth management and advisory licensee 3 privately owned by the Group. Wealth Partners is a manager, licensee 3 and shared services provider to high net worth advisers and boutique wealth management businesses. It combines the entrepreneurial expertise of the Group with its philanthropic heritage, financial services skills, innovative and experienced team and business-building capabilities. Wealth Partners offers advisers a uniquely tailored and comprehensive suite of services to allow them to exclusively focus on assisting their clients. It offers its partner boutiques: A licensee 3 partnership for wealth advisers and boutique business servicing the HNW $2 million to $20 million segment A profitable turn-key opportunity for building your own boutique Flexible equity ownership model and framework for exit and capital realisation 4 The opportunity to focus on client relationships and remain nimble and responsive knowing that administration and non-core functions are in place The confidence of being part of an exclusive network of successful and experienced high net worth advisers committed to servicing their clients and building their business in a stimulating and progressive environment " Wealth Partners, a boutique wealth management and advisory licensee 3 privately owned by the Group" A partnership with the Group and access to its management expertise, governance structures and investment in your business 6 Wealth Partners: An Introduction 3 Wealth Partners Pty Ltd will apply for and hold an AFSL. 4 In accordance with terms of a negotiated Share Purchase Agreement, see p. 10.

7 Wealth Partner Benefits The Wealth Partners model offers a compelling suite of benefits to wealth managers and advisers to enable them to build and grow a strong and vibrant boutique. Specific benefits enjoyed by Wealth Management s partner wealth advisers and boutiques include: Direct access to and support from a dedicated Chief Investment Office, including institutional-grade investment expertise, a robust, broad and flexible APL, portfolio construction and model portfolios Direct access to dedicated philanthropic, not-for-profit and family governance opportunities for your clients Direct access to property advisory services and the ability to directly source property opportunities for your clients Access to a suite of business development and support tools, including client and prospect events, marketing and advice collateral, sales and pipeline management tools and paraplanning Best practice compliance, governance and business infrastructure including licencing, compliance and regulatory support, a platform, technology, finance and human resources. Through this unique set of services Wealth Partners helps drive the growth of all our partners businesses, and we ensure that all the benefits of the Wealth Partners package are accessible to all of our partners, regardless of revenue or FUM. Wealth Partners: An Introduction 7

8 The Wealth Partners Ownership Model Wealth Partners is proposing a business ownership model that provides the confidence and assurance of a financially secure and experienced partner, combined with the freedom to build your own wealth management and advisory boutique. Turn key business infrastructure including Wealth Partners Equity Partner licensing 5 compliance platform and technology finance, and premises Business development assistance Dedicated Chief Investment Office Dedicated expanded HNW services and support Adviser or boutique advisory business Equity Partner Client financial and investment advice Client relationship management Mechanism for capital realisation: a valuation framework and internal marketplace for selling your equity Just as high net worth clients require tailored services, the Wealth Partners ownership model can be tailored to suit the needs of both equity partners. 8 Wealth Partners: An Introduction 5 Wealth Partners Pty Ltd will apply for and hold an AFSL.

9 The Ownership Model: How It Works Growing Revenue, Growing Equity Value The Wealth Partners ownership model establishes wealth managers and advisers as business owners with an equity stake and control of their own business. Advisers will be able to move away from the traditional commission grid to a dividend model building real value in the business they own, while capitalising on the security and experience of a partner with a history of building successful financial services boutiques. The specific equity model can be tailored to the needs of each wealth adviser and boutique. Wealth Partners will charge a service fee to cover some of the direct costs associated with providing centralised business services, and retains an equity percentage to enable it to recover the remaining costs via a dividend. By way of example, the wealth adviser may have a base salary of $100,000, plus, as an equity owner, a regular dividend from the wealth management boutique. Wealth Partners will provide centralised business infrastructure services for a percentage fee of the revenue generated. Once the wealth adviser or boutique pays administration salaries and tax, the balance of profit is split between the wealth adviser and Wealth Partners according to the equity structure, so that the interests of both parties are fairly aligned. Under the ownership model, a wealth adviser generating $1 million in revenue will receive a base salary of $100,000 and a dividend of $252,000 per annum. 6 The key to value creation is in the equity value. Assuming a 5 times PBT multiple, the wealth adviser s share of the enterprise value is worth $1.8 million. 7 Amortising this enterprise value over 5 years provides an annual equity value of $360,000 bringing the wealth adviser s annual total package and value creation to $712,000. The adviser s total package has the capacity to increase depending on the final agreed equity ratios. $800,000 $600,000 $400,000 $200,000-37% $360k $252k $100k Equity Model 28% $450k Average Commission on 55% Grid 8 Annual Equity Value Dividend/Commission Base Salary Each $1 of revenue is split in the following percentages: Operating Expenses and Tax 35% BWP (Charge and Dividend) Adviser (Salary and Dvidend) 6 For illustrative purposes only. 7 Assumes an enterprise value of $3m, and that the wealth adviser holds 60% and Wealth Partners holds 40% equity in the ownership model. 8 Assumes tiered commission model of 44 55%. Wealth Partners: An Introduction 9

10 Succession Plan Solution An ownership model is only beneficial if there is a guaranteed mechanism for realising your equity. One of the key distinctions of Wealth Partners ownership model is that is has been designed with a valuation framework and mechanism for capital realisation. We work with you upfront to put a succession plan in place, and when you are ready to exit the business, there are three options for selling your equity 9 : Option 1 Sale between wealth advisers Valuation assumed at an agreed EBIT multiple Deferred payment structure to facilitate equity transfer Successor does not need full capital to acquire shares Option 2 Sale between teams Sell to another Wealth Partners' boutique Valuation assumed at an agreed EBIT multiple Deferred payment structure to facilitate equity transfer Option 3 Sale to an external firm Wealth Partners has pre-emptive rights If acquirer will pay more than a specified EBIT multiple, the wealth adviser can sell their equity and Wealth Partners will have tag along rights to sell their equity at the same price Given the individual and bespoke nature of the boutiques, Wealth Partners will negotiate directly with each of the boutiques to ensure a successful succession planning process. 10 Wealth Partners: An Introduction 9 Please note that this investment may potentially be illiquid and is subject to a willing buyer. Details subject to negotiation and documented in a Share Purchase Agreement.

11 In Summary Wealth Partners is seeking to selectively partner with high net worth wealth advisers and wealth management boutiques who align to the professionalism, expertise and passion for success that currently resides throughout the entire Group. In return Wealth Partners will work with its chosen partners to: Establish a high net worth wealth management and advisory boutique with tailored and comprehensive support services, a flexible ownership model and framework for realising your equity in the future Leverage the Group s proven experience building and growing boutique financial services businesses Maximise peer relationships with professional, experienced industry innovators and high net worth individuals across the Group suite of businesses Offer your clients access to property advisory services and the ability to directly source property Offer your clients access to dedicated expanded high net worth services and support including philanthropic advice, foundation management and governance advice Provide you with the opportunity and freedom to leverage your own entrepreneurial spirit and experience, while being supported by highly professional and principled group. Provide access to institutional-grade independent investment expertise, a broad and flexible APL and support resources via the Wealth Partners Chief Investment Office " Wealth Partners is seeking to selectively partner with high net worth wealth advisers and wealth management boutiques " The statements in this brochure are subject to change and do not constitute an offer to enter into legal legal relations, rather they are an invitation to enter into discussions with you.

12 Fiona Rowland Chief Executive Officer, Wealth Partners Chris Cunningham Chief Executive Officer, Group Will Davidson Chief Operating Officer, Group Wealth Partners Wealth Partners Pty Ltd ABN House Level 1, 9 Queen Street Melbourne Published January 2014