What it takes to move from stockbroking into wealth management

Making the decision to transition to wealth management requires commitment and buy-in from all stakeholders.

Ensuring skill sets are up to speed, the right infrastructure is in place, financial advisers are recruited, and partnering with a technology partner that understands both sides of the fence makes the transition possible.

“We could then go and have a different conversation with our existing clients,” explained Chris Webster, Head of Private Clients, Euroz Securities.

In a whitepaper commissioned by HUB24, ‘The Stockbroker Revolution: A new era of business transition’, three established Australian stockbroking firms – Patersons, Euroz Securities and Ord Minnett – detail their journey from pure stockbroking to offering customers a broader wealth management services including financial advice.

For Ord Minnett, moving into wealth management was an efficiency play. The business found itself asking how could it best translate its investment ideas into portfolios to maximise returns over the long term?

“The issue for us was how do you better align the interests of the client and the adviser and how do you ultimately get a better outcome in terms of wealth creation for the client and what is the best structure?” explains Tim Gunning, Chief Executive Officer, Ord Minnett.

For Patersons, providing a better service was important. “Essentially we are looking after fewer clients better but with the higher touch and for greater value,” said Jane Tandy, Chief Operating Officer, Patersons. “It’s really about providing better service.”

The transition involves managing the tender process for platforms, bringing in financial advisers, overseeing communication and education materials internally and externally and keeping things on track.

“Its future-proofing your business but slowly,” said Tandy.

Making sure that the broader management team understand the move and have buy-in into the change is critical from the start as the transition takes time and a business slow down maybe necessary.

“It’s at the detriment of time that could be spent on quicker fix income,” said Tandy. “Although it’s a more stable income over the long term, it’s a difficult slow build.”

This buy-in must include financial advisers who are running a successful transactional broking business and do not have a lot of incentive to change.

It took Euroz Securities approximately six months to do the tender process, 12 months to get through the platform and SMA information and to understand how the different structures operated, and then 18 months implementation.

“I was learning by doing,” said Webster. “I didn’t realise how much I didn’t understand until I was actually in request for proposal process.”

Partnering with tech providers who understand both stockbroking and financial advice will help smooth the transition and modernise the investment tools of the business to manage multi-asset portfolios.

“We knew what the need was from clients and we were getting that demand from clients, so we set out to find it. We had been watching the market looking for it. HUB24 at the time was unique hence the relationship,” said Gunning.

Read the full whitepaper here.