HOW PRIME FI­NAN­CIAL DE­LIV­ERED ON ITS PROM­ISE

Why ag­glom­er­a­tion is the busi­ness model of the fu­ture

Business First - - FRONT PAGE - Au­thor: Grant Tit­mus

At 16 he was a top state ten­nis ju­nior and Mad­der thought be­ing a pro­fes­sional ten­nis player might be an op­tion. Af­ter fin­ish­ing his VCE at the pres­ti­gious Mel­bourne pri­vate school Carey Gram­mar, he went to La Trobe Uni­ver­sity to study com­merce. Life was on track.

How­ever, just six months into his com­merce de­gree the prospect of be­com­ing a pro­fes­sional ten­nis player was too much so he de­cided to give it one last chance. He went to the US and Europe and also had a stint at the John New­combe ten­nis ranch in Texas. He even con­sid­ered ac­cept­ing a ten­nis schol­ar­ship to a US col­lege. Yet af­ter a few months strug­gling on the cir­cuit “I fig­ured I wasn’t go­ing to be a world beater and ten­nis was great but it wasn’t some­thing that I re­ally loved.

“So there I was. I had quit try­ing to be a ten­nis pro­fes­sional and had quit six months into my com­merce de­gree. I had never re­ally wanted for any­thing but had noth­ing.”

Fast for­ward to to­day and Mad­der, 41, is Man­ag­ing Di­rec­tor of the Prime Fi­nan­cial Group, an ASX-listed com­pany with a market cap­i­tal­i­sa­tion of $25 mil­lion spe­cial­is­ing in ac­count­ing and wealth man­age­ment. It ad­vises over $1 bil­lion in client funds and, uniquely, has joint ven­ture part­ner­ships with 35 ac­count­ing firms of var­i­ous sizes around the coun­try.

So what changed in Mad­der’s life? “Af­ter com­ing back from over­seas I re­alised it was time to buckle down and make some­thing of my life.” He went back to La Trobe Uni and fin­ished a three year com­merce de­gree in 19 months. Dur­ing this time he also worked part-time in his fa­ther’s ac­count­ing firm. Part time work turned to full time “but it got to­wards the end of the year and I said to my fa­ther that I didn’t re­ally want to be an ac­coun­tant. I wanted to do some­thing I found more in­ter­est­ing.

“My fa­ther said he had an idea that he had been think­ing about for some time which was to get ac­coun­tants in­volved in wealth man­age­ment. He thought it strange that we had all these clients but then handed them over to some­one else when they wanted fi­nan­cial ad­vice about how to in­vest their money and plan for re­tire­ment.”

That was in De­cem­ber 1997. In Jan­uary 1998 Si­mon, then aged 23, and his fa­ther set up Prime Fi­nan­cial to help ac­coun­tants de­liver more than just ac­count­ing ser­vices to its clients.

“The early stages were hard. We were pretty close to run­ning out of capital a cou­ple of times but we knew we had a model that could be suc­cess­ful.”

Two early foun­da­tion in­vestors helped kick start the busi­ness. Look­ing to raise $4.5 mil­lion in capital, one-third came from Mad­der fam­ily in­ter­ests, one-third from well-known busi­ness­man and thor­ough­bred horse owner Lloyd Wil­liams and one-third from an­other prom­i­nent Mel­bourne fam­ily – all clients of Peter Mad­der’s ac­count­ing firm.

The vi­sion of the Mad­ders in the late 1990s was to cre­ate a busi­ness whereby they could en­able ac­coun­tants to of­fer their clients ac­count­ing and wealth man­age­ment. In more re­cent times it has added capital ad­vice to pro­vide its clients with what is lit­er­ally an end-to-end so­lu­tion.

“We con­fide a lot of in­for­ma­tion with our ac­coun­tant. That is why con­sumers have prob­a­bly less than a hand­ful of ac­coun­tants they use dur­ing their life­time.

“We needed to of­fer some­thing dif­fer­ent in what is a pretty clut­tered mar­ket­place. What we have done is to bring to­gether the ac­coun­tant and wealth man­ager to per­son­alise and sync our ad­vice so the client re­ceives a com­plete so­lu­tion.”

Part of the Mad­ders’ strat­egy was to get other ac­count­ing firms in­volved in of­fer­ing these ex­panded ser­vices. To this end, Prime has joint ven­ture part­ner­ships with 35 ac­count­ing firms around the coun­try. “This en­ables us to drive a lot more value through in­sight and ex­per­tise to grow ac­count­ing firms by giv­ing them ac­cess to ad­di­tional ex­per­tise as well as in­vest­ing capital into

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