Fiducian (ASX:FID) is a relatively small company with a market capitalization of $273 million. There are no analysts who provide forecasts for it and trade is fairly illiquid. On the upside, it has a Quality score of 99, a Momentum score of 87 and an overall StockRank of 95. The stock price has risen 60% over the past 12 months and it pays a fully franked dividend 4.5%.
Fiducian is an integrated financial services provider. It has three primary operating divisions:
Financial planning
Funds management
Platform administration
In terms of other companies with similar business models, it has similarities with financial services groups like AMP (ASX:AMP) and Insignia Financial (ASX:IFL), as well as platform operators like Hub24 (ASX:HUB) and Netwealth (ASX:NWL) but in terms of size is dwarfed by them. It out ranks all of them in terms of its StockRank and may represent an opportunity for retail investors where institutional investors fear to tread.
The revenue split for Fiducian is:
Financial planning - 36%
Funds management - 37%
Platform administration - 27%
The financial planning arm has 80 advisers across 48 offices covering every state. It is fairly evenly split between franchised financial advisors and financial advisors directly on the payroll in terms of both headcount and funds under advice.
Like its peers, Insignia and AMP, Fiducian is looking to capitalise on the synergies of having both funds management products and a platform within the same group as their financial planning business. The idea is that instead of just receiving a fee for the advice, they can also receive fees from the products invested in as well as the platform used to manage it all. They have noted that there is $1.6 billion of funds under advice that is managed on external platforms and they are working on a process to transition much of that to their platform.
Integrated financial service providers need to be very careful when they recommend advice clients use internal platforms or investment products. The overriding principle is that the product or platform must be in the ‘best interest’ of the client. This is a statutory requirement. In the past regulators have cracked down on the situation where recommended investment products were…
