HOW PRIME FINANCIAL DELIVERED ON ITS PROMISE
Why agglomeration is the business model of the future
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