WTL's restructure swoops in on the largest wealth transfer in history

Big banks are all but cutting out their financial services, citing increased cost pressures as a result of the regulatory changes following the 2017 royal commission. 

Meanwhile, advisers that are independent business operators are having a field day as the demand for financial services grows like never before.

Australia is at the doorstep of the largest intergenerational wealth transfer in history. In the next 15-20 years, some $3.5 trillion will be transferred to the next generation, increasing the demand for specialised services to deal with the likes of retirement and end-of-life finances, as well as wills and estate planning.

“In Australia, the Australian investor will require more financial planning than not. The Government is not making it any easier with changes to legislation almost daily. The need for quality advice is only going to go up,” said Lee IaFrate, Executive Chairman of Armytage Private Limited.

These circumstances mean opportunities abound for independent provider WT Financial Group (ASX: WTL).

“The royal commission forced us to have a rethink as to our approach to ensure we were unlocking shareholder value and had a sustainable business moving forward,” WTL Founder and Managing Director Keith Cullen said.

“We’ve turned industry disruption on its head. Instead of it being a burden to us, we’re capitalising on it and we’ve turned it into an opportunity.”

Central to WTL’s strategy was transitioning from a business-to-consumer focus to a business-to-business model. WTL now primarily provides services to advisers that are independent business operators. The services include licensing and compliance, education and training, technical support, practice management, and business development.

According to Mr IaFrate, it’s WTL’s recent acquisition of Sentry Group that is another “company-changing deal”.

On completion of the acquisition, WTL will have 275 financial advisers across 200 practices in Australia, up from 42 advisers just three years ago.

“If you look at what’s going on in the dealer group and financial planning networks, these are becoming very sought-after assets,” Mr IaFrate said.

Mr laFrate expects the market to rerate WTL very strongly as a result of these company moves. Prior to the restructure, WTL had a market cap of around $2-3 million. Today that figure sits at $28 million. The company expects a FY22 revenue guidance of around $70 million, and a net profit of more than $2 million after tax guidance.

“We are very happy investors,” Mr IaFrate said.

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