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The financial planning industry has received its fair share of negative press over the past 12 months, a stigma which Loan Market’s new financial planning business, Wealth Market, wants to get away from.
Speaking to Mortgage Business, Loan Market executive chairman Sam White said the negativity brought upon the industry by the CBA scandal is a challenge when launching a new dealer group.
“I think it is a challenge because there is broad-based scepticism which you need to overcome,” Mr White said, adding that one of the benefits of launching the venture organically is having no legacy.
Financially, though, it has its drawbacks.
“We will lose money for the first three years in this business,” he said. “That is the forecast.
“We will break even somewhere in year three on a monthly basis.”
Mr White said Wealth Group would prefer to recruit volunteers who actually wanted to join the group, as opposed to buying planners and moulding them to fit the model.
Mr White said that buying a financial planning business would have been profitable from day one, but would come with a host of legacy issues.
“There were quite a few financial planners for sale and you go cash-flow positive pretty quickly or even straight away by buying a group,” he said.
“The reason we went organic was because we didn’t want to buy legacy.”
While the group has been gearing up for a launch since February, it is still waiting for its AFSL to be approved before it can begin operating.
An official launch is expected by the end of the year.