PERTH company Plan B Financial Services has had four ownership models over the past 20 years, but new boss Terry Dillon argues the latest is the best yet.
The ownership changes stemmed from Plan B’s search for the best capital structure to support a growing business and cope with changing market conditions.
“There was always a tension in the business, where we needed to broaden the shareholding and keep our good advisers keen to continue working in the business,” said Mr Dillon, who has been through all the major changes.
Brian Taylor and Craig Lubich established the business in 1986 under the name Precedent Financial Services.
Over the next decade they were joined by a handful of other shareholders, including Mr Dillon, but eventually fell to the lure of a big brother.
Half the business was sold to Bankwest and the name changed to Plan B, before they decided private ownership was the way forward.
After another decade in private ownership, the company was listed on the ASX and, for a while, the share price rose.
But the 2007 listing was followed by the GFC; business got tougher, the share price slumped, and some of the major shareholders eventually decided it was time to cash in.
As a result, Plan B has joined up with national financial services group IOOF Holdings, which has its own interesting history, being established in 1846 as the Independent Order of Odd Fellows.
Five months on from IOOF’s $49 million takeover, Mr Taylor is enjoying the ski slopes of Europe, Mr Lubich continues as an investment adviser, and Mr Dillon is the new head of the slimmed-down Perth business. Reflecting on the changes, Mr Dillon sees positives in all of the ownership models.
“The Bankwest saga was very positive for us; we came out of it a much stronger organisation because our business model was so strong, they transferred most of their clients to us,” Mr Dillon told WA Business News.
“You’ll hear all sorts of stories about how difficult it was, but Plan B did very well out of it.
“In fact, we did well out of every acquisition - KPMG, Terrace Counsellors, TrustWest.
“They all came with their issues, but because we had an integrated solution, those clients were worth more to Plan B than other groups.”
Mr Dillon said the company’s listing on the ASX was designed to provide capital for growth.
“We had the systems and functions to grow, but it was a difficult time to grow. There wasn’t much growth for anyone during that time,” he said.
He maintains the IOOF takeover was a good deal for shareholders.
“We listed at $1, we got to $1.60 and sold to IOOF at 60 cents. Is that a good or a bad outcome? I think in that timeframe it’s probably a very good outcome, plenty of businesses didn’t survive,” Mr Dillon said.
IOOF managing director Christopher Kelaher said he had been aware of the group for many years.
“It’s interesting that you reminded me of the name Precedent because we would have had discussions in those days about mutual opportunities,” he said.
“I followed them principally because it was an almost identical business except on a different scale. It has four compartments - it has a platform, it has investment management, it has advice and has a trust business. That’s exactly the configuration we have.”
Like the ASX listing, Mr Dillon said the IOOF deal was also driven by the need for capital.
“The business had got to a point where, in order to grow and meet our goals over the next five years, we were going to have to invest a reasonable amount in our back-office system.
“We would have had to invest millions of dollars.
“Before we invested that money, we asked if there was a partner out there for us, someone who already has those systems in place.”
Mr Dillon said he has been pleasantly surprised how well the businesses fitted together.
IOOF has completed many acquisitions and Mr Kelaher believes the Plan B integration had come together as expected.
“All of the advisory business, the front-end, remains intact and will be built on and developed, and all of the areas that needed resourcing, the back-office and the technology, they are the things we are long in. We argue that’s what we are good at,” he said.
Mr Kelaher said IOOF was “very low touch” with its subsidiaries and would leave the Plan B team to run their own business affairs.
Mr Dillon echoed this point, saying Plan B and its team of 10 investment advisers would continue to operate as a fee-based advisory business.
“There are plenty of other places our clients could go if we didn’t meet that promise,” he said.
While IOOF has a low profile in the Western Australian market, Mr Kelaher said the group had been in the state for many years after buying corporate superannuation business Allied Buck and looking after superannuation for members of the Australian Medical Association.
