Quote: From legendary management consultant and writer, Peter Drucker.

When you next visit Pinnacle you may notice a slight change in the Office dynamics with a return to a more slimmed-down Office infrastructure and staff resourcing.

Over the past decade, we have pursued a strategy to grow the Pinnacle Practice in order to optimise Practice systems and procedures and nurture new talent from within.  We have also been keen to achieve the financial advantages of scale and sustainability which lead to reinvestment in Practice compliance processes and service standards. To this end, over the past 4 years we expanded our Partner numbers from 2 to 4 Partners to achieve the critical mass we were seeking.

In a recent industry peer review conducted by Macquarie of over 350 similar Practices across Australia, Pinnacle was rated in the top 10% nationally in terms of Practice management and client servicing.

What had set Pinnacle ahead of many of our peers was our commitment to building a progressive and innovative Practice culture from within. This has helped to attract, empower and retain gifted people who are committed to delivering an intelligent, client-first approach to relationships. Rightfully so, our embedded cultural beliefs extended to a non-negotiable duty of care to serve clients’ best interests while avoiding conflicts of interest wherever possible.

The findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, has served to reaffirm the decisions Pinnacle initiated over a decade ago.  At that time, Chris, Selena and I decided to separate our Practice from the now obvious conflicts where product providers and advice providers (financial planners) were joined at the hip and the lines between client’s best interests and those of meeting a corporate  agenda may have become blurred. In this regard, many of our readers may recall Pinnacle negotiating with product providers to return volume rebates to clients in the form of reduced Platform fees, rather than pass rebates across to Pinnacle.

In April 2009, Pinnacle took the bold decision (for the times) to become self-Licensed and applied for our own Australian Financial Services License (AFSL). This further separated our Practice from the now described ’vertically integrated’ business models (where product and advice collide). Clearly not owning product (and the consequent relying on related product fees to supplement income) has allowed Pinnacle the freedom to apply recommendations which are unmistakably directed in the best interests of  clients.

Now to the point!

Whilst it is pleasing to be recognised by peer review as a leader in Practice development, from the perspective of achieving a solid cultural alignment between the 4 Partners, Chris, Selena and I felt we had not been as successful. In pursuing a growth strategy, we unwittingly surrendered our resolve from within the expanded Partnership towards maintaining a cohesive cultural existence with shared values across all Partners, in particular, a shared and immutable commitment to avoiding conflicted revenues. In recognising this indifference, and in view of the Royal Commission’s findings, we decided that the best way forward for our Practice was to ‘go back to the future’ and for the time being, settle for a smaller Partnership. In this way, the Practice could win back its cultural unity and values so vigorously defended in the past.

As from 1st July, our leadership group will consist of Chris, Selena and Merrick. Together with our existing staff, we share a common vision to remain solid in our commitment to an  uncompromised, client-first approach to how we deliver services to clients and generate Practice revenues. It is all very well being very effective in strategic areas which  measure performance and achieve growth, but not at the cost of compromising cultural values. In the end, we discovered culture really does eat strategy for breakfast!

Author: Merrick Shipp, Founding Partner

 

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