AFG offloads planning arm to Sentry

Perth-based mortgage aggregator Australian Finance Group has sold its financial planning arm to ANZ-backed Sentry Financial Group.

The transaction between two Western Australian companies was the result of a strategic review at AFG, according to an announcement, and will help Sentry claim a spot among the country's largest planning groups, with 300-plus financial advisers.

AFG is the country's largest mortgage aggregator, and was among the top 50 biggest planning groups in Australia before the sale.

Under the agreement, AFG will become a shareholder in East Perth-based Sentry.

AFG managing director Brad McKeon was unavailable for comment, but it is understood the deal involves cash and scrip.

The Perth aggregator was planning to list two years ago with an expected market capitalisation (at the time) of roughly $200 million, before plans were shelved.

The transaction takes Sentry's adviser numbers to 310, if there isn't any fallout, placing it among the 20 biggest dealer groups by adviser numbers in the country.

ING Australia had a 37.5 per cent stakeholder in the Murray Hills-led Sentry, which is now controlled by ANZ Bank.

An adviser licensed through the Sentry network said the transaction would give the group greater buying power when it came to negotiating terms on investment products and research.

Full announcement below:

National dealer group Sentry Group CEO Murray Hills has announced the acquisition of the Australian Finance Group Ltd's (AFG) financial planning arm Australian Finance Group Financial Planning Pty Ltd (AFGFP).
AFGFP has over 190 advisers with offices in all Australian States.

Commenting on the announcement, Murray Hills said the acquisition of AFGFP would significantly bolster Sentry's position in the marketplace as the dealer group's adviser strength would be increased to over 310 advisers nationwide with a total $2.2 Billion FUA.

Through its member network, AFG manages over $50 Billion in mortgage finance representing over 10% of home lending in Australia. Earlier this year, AFG conducted a comprehensive review of its operations and strategic future direction and in doing so, acknowledged it required a 'specialist' industry partner within the financial planning marketplace.

Sentry's industry reputation, experienced management team, national presence, robust and flexible operational structure, adviser service specialisation and administrative capacity ensured its success.

"The synergy and compatibility of our respective corporate cultures, values and commitment to the long term well being of our advisers and their practices had the greatest influence on our decision to accept the Sentry offer," said AFG Managing Director Brett McKeon.

AFGFP and Sentry will continue to operate under their individual brands and licences, although a number of administrative and support staff will transfer to Sentry Group. Furthermore, under the terms of the arrangement, AFG will become a shareholder in Sentry Group and in doing so reflects its ongoing involvement and commitment to financial planning and life risk protection advice industry.

In March 2008, Sentry Group confirmed a strategic partnership with ING Australia (INGA) whereby INGA acquired a 37.5% stake in the dealer group. The partnership with INGA was a milestone in the four year history of Sentry as it provided the foundation for the dealer group's ambitious growth aspirations.

ING Australia's involvement with Sentry Group has given the business and their advisers greater profile.

The shareholding has substantially assisted Sentry in attracting advisers and executing its growth strategy.

Murray Hills also confirmed that the greater industry presence, economies of scale and operational efficiencies will deliver significant benefits to advisers and their clients.

"Additional benefits that will be available to the Sentry and AFGFP advisers will be access to a broader Approved Product List; extensive range of personal and professional development programs; innovative client service and retention initiatives; and more efficient compliance support," said Murray Hills.

Murray Hills also confirmed that Sentry Group and AFG have agreed to implement a cross marketing program that will strengthen the marketplace offering of the respective adviser networks and provide them additional business growth and client service opportunities.

Murray Hills concluded, "The acquisition of AFGFP by the Sentry Group will be significant and long term with both AFG and Sentry benefiting from individual specialisation, cross marketing and economies of scale."

"The acquisition of AFGFP has accelerated the Sentry Group's long term national growth objectives and will provide a significant base for future recruiting and acquisition endeavours."