Financial Partners, the offshore financial adviser with over US $1bn under advice, has sold its Japanese operation and is splitting into a network of independent regional businesses in a cost-cutting measure triggered by the global recession.
The company experienced a 40% drop in sales in the three months following the height of the meltdown last year and has drawn up the plan in order to “survive.”
Sean Kelleher, chairman of FP group, said sales had picked up since then but explained: “In this environment, the primary aim of a financial services business is to survive, the secondary one is to make a profit. We recognise this and that’s why we accepted that we need to make changes.”
The company is to “move away the expensive fixed costs of a centralised business” towards a network-based model, with advisory businesses serving three core regions; UAE/India, Hong Kong/China and South East Asia.
Each will run independently and buy in services previously provided by the centralised group, including asset management, compliance and finance.
Kelleher said the devolution process was expected to take several more months to complete.
He will remain head of the UAE/India business. South East Asia - primarily Malaysia and Indonesia - will be led by former group chief executive Cameron Knox and Hong Kong and China by Howard Clark-Burton and Peter Kende, who were both original founding members of Financial Partners.
Arch Financial Products, the UK-based fund manager that last year took a 48% stake in Financial Partners group in order to drive through an expansion plan, including a move into banking and legal services, will remain a shareholder in each of the separate businesses.
However, growth plans are now on hold.
“Nevertheless, Arch has remained supportive during this period of massive change,” said Kelleher.
The Japanese business was sold back to its original owner, James Murray.
Kelleher said: “With the Yen appreciating against the USD by over 30% the Japanese business became a handicap to a USD-based business model. It made sense to look to an owner with local Japanese interests.”
The client book is believed to have now been sold to deVere & Partners.
Kelleher highlighted that sales has already began to pick up.
“Advice is counter-cyclical, we all know that anyone can give advice in rising markets, only the good advisers manage to find clients in falling or depressed markets. Thankfully, our advisers are securing business based on the number of people who need good financial advice.”
He added that it was possible Financial Partners could merge once again when economic conditions improve, or adopt a network-based business model on a more permanent basis.