Chris Powell, COO and CFO at Centric Wealth, talks exclusively to WealthBriefingAsia about how the Australian wealth manger intends to grow and why it is well-positioned to tap the changing regulatory landscape.

Chris Powell, COO and CFO at Centric Wealth, talks exclusively to WealthBriefingAsia about how the Australian wealth manger intends to grow and why it is well-positioned to tap the changing regulatory landscape.

It has been a tumultuous six months for Centric Wealth, the Sydney-based private equity-backed wealth advisor.

Powell himself started at the firm in
July, joining in the midst of a senior management clash which would
eventually trigger a clutch of staff defections.

Former
chief executive John McMurdo quit suddenly in July over a shareholder dispute
concerning the risk management business of the firm. Hot on McMurdo’s heels
were chief financial officer Geoff Scott and company chairman Phil Kelly. Chairman David Shein
replaced McMurdo on an interim basis.

In
total seven executive and support staff left the Australian wealth manager as a
result of McMurdo's departure, according to Powell, although local media
sources say the total is more like double that amount. The advisor was planning to publicly list its shares, but in 2009 agreed that 70 per cent of its business would be acquired by private equity firm CHAMP for $80 million. With 260 staff, it has $4 billion in assets under advice and $1.4 billion in loans under advice and other debt instruments.

Powell
said mass attrition of this nature is common in situations when a top executive
leaves. “Any time there is a leadership
vacuum there is always uncertainty amongst staff. This was evident when I
joined,” he said.

However
last week Centric’s Shein wrote a relieved statement to investors and press,
announcing that the management ranks had been fully reinstated with the
appointment of a new CEO and CFO. Phil Kearns, the erstwhile captain of
Australia’s national rugby union team and a former Investec director, will take
the reins at the Australian wealth advisor from 12 December. Powell, who came
in as CFO initially, takes on the additional role of COO.

Powell says he and Kearns complement each other's skill set. "Growing our business going forward is a key objective for us and one of the prime reasons for employing Phil Kearns as our CEO - he is just so well known and can open doors anywhere across Australia. Phil's role is to be primarily market facing and offer leadership to overcome the unsettling issues of July, while mine is to ensure that the service offering to our customers is excellent. So we complement each other in our skills and what we can bring to Centric to drive it forward.

“Now
we have a full leadership team the staff feel more settled and morale has
improved,” added Powell.

A fresh start

Now back to full management ranks, Powell
is upbeat on the firm’s future. The current market turmoil is attracting new
clients because of the attention its advisers can give their clients. The group has one of the highest
AUA per adviser, but with one of the lowest number of clients per adviser in
the Australian financial planning industry- reflecting its pool of super rich
clients, he said. 

Last year the level of assets under advice stayed stable, despite the uncertainty in the investment markets which has led many clients to move from investing into cash. 

And an upcoming overhaul of Australia’s
financial regulatory landscape will provide a once-in-a-lifetime opportunity
for Centric, says Powell. The Future of Financial Advice, or FoFA  reforms, are similar to the UK’s Retail
Distribution Review in many ways.

The Australian legislation, due for
implementation from 1 July 2012, will ban commissions and volume-based payments
in relation to the
distribution and advice of retail investment products, in a bid to increase
transparency and flexibility of payments for financial advice.

The ban
on upfront and trailing commissions and like payments for risk insurance within
superannuation will apply from 1 July 2013.

The fallout from the reforms will be revolutionary,
says Powell, as the heavier regulatory burden will force many smaller players
to exit the industry.

Which is where Centric steps in. “It is a
tremendous opportunity,” said Powell. “Nowadays we are constantly on the
lookout for good financial planning advisors who we can acquire with suitable
processes, systems and positioning. We are also open to anyone approaching us,”
he added.

“It has got to be the right fit, whether an
individual or a partnership or a small group of firms. But we want to ramp up
our client advice base significantly in future,” said Powell.

It is not the first time the ten year-old
firm has been on the hunt for acquisitions, and much of its $4 billion of
AuA is from bolt-on mergers. The firm's main acquisition last year was a small life risk advisory group called Certe. Others include brokerage firm Kingsbridge and Eagle, Halliday Financial Group, Melbourne based accounting and advisory business Gaddie Metz Kahn (which it has since sold) and Sydney-based Myers Business Partners.

Of course as uncertainty continues to roil the markets there are many obstacles lying in
Centric’s path. “The markets are a constant challenge, combined with the
retention of clients. HNW individuals are spooked by the current volatility and
moving from riskier investments into cash which attracts lower fees,” said Powell.

Although he doesn’t have a target, he says the
firm will start moving towards the $5 billion mark and onwards as it seeks to
grow market share in coming months. Where will Centric be in a year’s time?
“Bigger!”