John (not his real name) is a Dover adviser. John joined Dover in 2010 attracted by the ability to run his practice as he sees fit and the freedom to encourage his clients into SMSF based direct investment strategies.
Since then John has built up a new client base of more than 100 SMSFs.
John’s SMSF financial position is as follows:
| Average administration fee | $2,500 |
| Less cost paid to Dover | $1,000 |
| Net profit on administration work | $1,500 |
| Average fee for investment strategy | $1,500 |
| Commission (including year one commission) | $500 |
| Average net profit per SMSF | $3,500 |
| Number of SMSFs | 100 |
| Profit attributable to SMSF practices | $350,000 |
John is making an extra $350,000 a year profit. He and his staff handle the client interface and Dover does the rest. Dover cannot contact the client other than through John and the contract makes it clear that John owns the client base and can sell it without restriction to third parties. John’s SMSF practice has increased the capital gains tax free value of his practice, perhaps by more than $1,000,000.
John’s clients are happier, are staying with him and are not subject to institutional marketing strategies. He is in control of his own practice and no one tells him what he has to say to his clients.
John is looking to introduce an estate planning capability into his practice, and his SMSF capacity suggests this will work really well.