Fiducian Group Limited (ASX:FID) Managing Director, Indy Sing discusses fund management services at the CEO Sessions, Sydney.
I started Fiducian Group Limited (ASX:FID)
in about 1997, when we started taking money in. I had a partner, AM Corporation; we both put in about $17,500 each. They did the back office administration for me and the back office services. We paid for all those services. And then in 2000, we listed on the ASX and then we took control of our business.
We’ve since grown the business; we’ve got five different operating divisions. We have financial planning; we have a platform administration business. We have a funds management business; we have IT development and accountancy resourcing. It’s a solid foundation. It’s been pretty exciting for us; consolidated net revenue grew by about 26 per cent. Our EBITDA and underlying net profit after tax grew by 15 per cent, over the corresponding period. And dividends at 5.5 cents per share were up 22 per cent, over the previous period.
I think it’s important to say that over the last 13 of 16 years, we have had earnings growth of more than 10 per cent a year and we have no debt. We had a distribution of 5.5 cents per share. Our policy is to distribute about 60 to 70 per cent of net profit after tax, which we’ve done. We’ve grown our dividends quite substantially and we’ll continue to do that.
Financial planning is actually the cornerstone where we generate our revenue from. We’ve got about $1.7 billion in funds under advice. We have offices pretty much across Australia, the bulk of it in New South Wales. And we’re very particular about which financial planners we get, because ethics is extremely important to us. And the culture fit is also extremely important to us, so we need to keep growing that. We’re going to grow financial planning through acquisition and through organic means. But we are not going to compromise on quality or ethics.
The funds management was phenomenal last year. In fact we measured ourselves. We have a manager to manager process, where we try to average between a number of underlying fund managers. So we don’t have individual stars, we use specialist fund managers, who we employ after serious research. We put them together to manage a fund for us. Actually when we measured ourselves over the last say 10 years, almost every period funds are diversified funds were top quartile, except for one or two periods.
We have developed the systems ourselves. They’re extremely agile and sophisticated, and very flexible. So we can administer people’s money through a superannuation wrap that we have, and a non-super investor director portfolio service. We have about $1.3 billion under administration. And in the coming year, we intend to now use our intellectual capital that we’ve developed on our systems, and capture some of the administration market from others.
Accounting services division is a small unit for us, it hasn’t grown much. But we’re going to start putting pressure on that to try and draw the self-managed superfund administration. What we’ve seen is that we’ve built an extremely solid platform of interrelated businesses. The future to us, and as the specialist at Harvard and others say, is that you need a platform of businesses, which collaborate and you can orchestrate that together. And we have these, so we’re already part of the future.
We also have a very strong corporate culture, ethical culture. We have what’s called the Fiducian family culture, where we look after our staff and we have high staff retention. And we’re very lean in our expenses. Plus the size that we have, we can move very quickly to adapt and change and build systems. The priority for us is to grow and in an ethical and proper way.
So first we must grow our financial planning. We need to grow it organically, give good service, good advice and good training to our financial planners. We need to grow it by acquisition, which we’re starting to do now. We acquired about $300 million of planning business last year and we’re going to continue. So we need to grow financial planning. That feeds the money through to the platform and the funds.
So besides the fact I have to have good returns from the funds, the platform needs to be developed, which we’ve done. We’re going to put in tremendous straight through processing services and technology; we go straight to the adviser. In fact, we’re probably the only business that develops both the financial planning software, and the platform administration software, under the same roof. So we can link the two and we can use this to give us an advantage.
So we’re going to start expanding our footprint in administration as well, and growing financial planning. Plus making sure we get good returns from our funds.