Bouris says legacy wealth business ‘did not fit’ YBR model

In a trading update on Tuesday, YBR explained that its subsidiary Yellow Brick Road Investment Services Pty Ltd had entered into a book sale and purchase agreement whereby INPRO Australia Pty Ltd (INPRO), a professional financial advisory company controlled by Alex Kean, will acquire YBRIS’ advice service relationships, records and recurring revenues from approximately 150 private clients and their related wealth portfolio.

The purchase price is approximately $425,000, of which around 80 per cent is payable up front, with the balance payable approximately 12 months post-completion, subject to adjustment depending on revenues received during that period. Completion is subject to a number of standard conditions precedent and is expected to occur within two months.

YBR said that its decision to sell this business was based solely on the YBR wealth division focusing on the scale that the YBR branch franchisee and Vow broker and adviser network and other platforms can provide.

“YBRIS is a standalone legacy business within the broader YBR Wealth Division of the YBR Group and its portfolio did not fit within the operational structure required for a branch and broker-focused network,” YBR executive chairman Mark Bouris said. “We will work with INPRO to ensure this transition runs as smoothly as possible.”

As of FY17, YBR has $1.5 billion in funds under management (FUM), which includes institutional funds, an increase of 105 per cent over the year. Premiums under management (PUM) increased by 35 per cent over FY17 to reach $17 million.

The group’s wealth business is led by Adam Youkhana, who was head of Westpac’s private bank financial planning arm for six years before joining YBR in September 2016.

One of his primary objectives since taking up the position has been giving YBR branches options for providing advice without the need for mortgage brokers to actually “cross-skill” and become financial planners themselves. These include having franchise advisers and mobile advisers based in or made available to YBR branches and offering phone-based advice.

*This copy was updated on 27/06/2018 to reflect a change to the ASX announcement detailing that the deal did not include Yellow Brick Road Wealth Management Pty Ltd.