Advice licensee Crescere has experienced a good take-up of its joint venture offering to accounting practices, having formed 18 partnerships with accounting firms to date.
“What we’ve found in doing this is that it’s resonating with accountants. We’ve got agreements with 18 accounting firms now and if we decided to, we could accelerate the number of joint ventures we have quite quickly,” Crescere chair David Smith told selfmanagedsuper.
Smith noted the licensee would be very happy if it could strike up another 12 joint ventures before the end of the year, but admitted the expansion process had to be managed carefully.
To that end, he said it was vital for his organisation to recruit financial planners who understood the nuances of working with accountants.
He noted any expansion for his business would ideally include joint venture arrangements with accounting firms located in Melbourne and Brisbane to add to Crescere’s current presence in Sydney and Adelaide.
Under its joint venture model, Crescere operates as an advice business with its financial planners operating under the control of the relevant accounting firm.
“We are essentially a financial planning firm, but our planners walk around with a different business card depending on which accountants they’re working for,” Smith revealed.
“So if we have a joint venture with an accounting firm, our planner will work for their clients from their office under the firm’s own wealth brand. So for all intents and purposes the client feels it’s the accountant providing the service and then all of the hard yards of doing the plans, managing the business and all the compliance is done by us.
“We then have a revenue share arrangement in place with the accounting firm so it gets a stream of revenue with the ownership established on a 50/50 basis.”
One of the strengths of the model is the absence of a lock-in clause if an accounting firm wants to terminate the arrangement, he said.
“The accounting firm can at any time buy us out if it wants to go its own separate way. It means the accounting firm is building a capital asset at the same time,” he said.
“The model really is resonating and it seems to me it could be one of the future directions for how the community is going to receive financial advice serviced via accounting firms.”