Prime’s Three Pillars put Clients in a Better Place

Like many young men in their teens, Simon Madder didn’t really know what he wanted to do as a career. His father Peter was a successful chartered accountant with his own firm and there was the opportunity to go to work with him. 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 their firm,” Simon said.

In 2016, Prime Financial took this one step further by increasing its stake in Melbourne-based accounting and business advisory firm MPR from the 40% it acquired in December 2015 to a 93% stake in August 2016. Simon said the reason for increasing the stake in MPR was because it offered something unique.

“MPR’s focus is on supporting businesses beyond accounting and business advisory with a focus on research and development grants and innovation for growth-orientated businesses. It has helped hundreds of Australian businesses access much-needed R&D grants (cash from the government) which have fast-tracked their development.

Simon said partnering with like-minded accounting firms enabled Prime to add significant value firstly by assisting them to offer a larger range of services such as wealth management, but also investing capital into the accounting firm along with the advice and expertise a larger group can provide.

“The firms that we have chosen to partner with are all different but with one common philosophy – that clients are best served by receiving accounting and wealth management through one experience. Some firms are very growth oriented, some need to address a succession planning issue, some need to focus on the wealth management piece, and don’t have the skills or expertise to put that into place. We are in the unique position to bring it all together, and help the firm achieve their vision, their goals and their objectives.

“For our clients it means we are able to offer a variety of services including wealth management and superannuation advice, business and personal planning, management and accounting, protection for business and personal capital and access to capital for growth and innovation.

“This is much more than a traditional accounting firm offers. We deal with innovation on a daily basis and need to demonstrate innovation ourselves! One of our mottos is aspire, innovate and grow – and we need to live this every day.”

The addition of the MPR business, which is being merged into Prime, adds complementary services for Prime accounting partners and clients and includes just over 30 employees and will see MPR rebranded as Prime. As part of the deal, MPR Managing Partner Matt Murphy joins Prime Financial’s leadership team adding important additional expertise. “We now have expertise in grants, innovation consulting and capital advisory – expertise which our JV partners are now able to access to grow their business but also the business of their clients.”

In January 2007, Simon’s father Peter joined the business on a more permanent basis. Today, Peter is an Executive Director and Chief Financial Officer.

“While I might have come up with the Prime business model, it was Simon who took over the running of the company from day one. Simon built the business. I basically got out of the way although obviously provided advice and guidance as he was only 23, although a mature 23 at that! He is still only young but he has experienced a lot in the past 20 years running his own business and the ups and downs that it has had.

“Today Simon focuses on growing the company and doing the deals and I tend to do the background stuff.”

Peter said he believes Prime is in a great position to grow. “The whole industry is going through a transition – primarily rationalising. Margins are tighter and the operating costs of operating a business need to come down.

“We have a clear plan of where we are heading – and that includes additional partnerships. Increasing our stake in MPR made complete sense. It has a great business model and together we will be better than two single entities.

“Undertaking acquisitions makes sense as growing organically can be slow but any future investment we make must be complementary to our business plan. Because the industry is changing and the way we do business is changing, scale is important. “We believe in our business model and we know it is in the category of best practice.”

While Simon and Peter have been with Prime from the start, staff retention has also been pretty phenomenal in an industry where retention can often be difficult.

“One of our first employees was Danny Bowe, who is still with the firm 16 years later. There are several other team members well into the teens in regards to years of service,” says Simon.

“We have tried to create an environment where people can thrive, but we can do better. We are given a lot of responsibility by our clients to look after their affairs – and we greatly respect that responsibility.”

Simon says Prime does not intend to rest on its laurels even though it is successful. “You are constantly pushing yourself and your team to be better. You don’t really stop. Sometimes I will get up at 4am because I have thought of something and want to capture it. On weekends I am constantly thinking about the business and the direction it is heading. Sometimes it is second-guessing yourself but in the end there is a team in place, both from a group and board level, that I know can take the business forward.

“It is vitally important that we stay ahead of the curve. We want to build something that is different, innovative and has the client as the centre of our considerations. Fortunately, no one has to push the senior people. They are their own worst enemy in wanting to do better for clients, themselves and for the firm.

“I started my career as an accountant and I have had the privilege of growing up around accountants and seeing how highly regarded my father is held by his clients. They are a member of the family. Accountants and financial advisers are in a privileged position and clients need to feel comfortable that we aren’t prostituting them just for another buck.  They are their most trusted advisors.

“There is an opportunity today to be more dynamic and that is why when we look at other businesses to acquire or partner with we want to make sure they are continually moving forward and not just doing what they were last year or the year before. Accounting, and to an extent wealth management, can be seen as solid, staid professions but that is not what I would say about the people around me. There is an opportunity today to be more dynamic and embrace the needs of business owners and family groups.

Simon said that the way Prime is structured is to provide a group of services to get its clients into a better place. “It is not about being a jack of all trades and master of none. This is about providing expertise across our three pillars – accounting, wealth management and capital – with the ultimate goal of improving peoples’ livelihood.

“Our growth plan is to ensure every business that we have a joint venture with is growing and delivering on the client promise. That is a non negotiable from my perspective. If you standstill for too long you can become irrelevant very quickly.

“Our aim is to be more innovative – we want to know what our business is going to look like in 3 or 4 years time. We are investing in people and technology. No advisory firm in the future can be successful if it is not people, client and technology led. There is science behind our marketing for example – we need to know where and when to be investing our time.”

Simon is also adding to his own knowledge and last year was part of a group of 10 MDs that went on a global innovation tour that included tours of US financial services and consulting firms, technology companies, creative and design agencies and firms such as LinkedIn. “The aim was to see how these companies were looking to the future and how they would get there. I found it a great way to stretch my mind because these companies are testing the boundaries – which is what we want to be able to replicate.”

Business First is a peer-to-peer magazine: written by CEOs and other high level executives, with interviews with some of the country’s best leaders.

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