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AZ NGA dives into supply chain with Virtual Business Partners tie-up

AZ NGA moves on from dealer group model to take up a horizontally integrated strategy.

AZ Next Generation Advisory (AZ NGA) has broadened its slate of industry investments by teaming up with large AMP advice group Invest Blue to purchase a forty per cent stake in Philippines-based paraplanning and back-office support provider Virtual Business Partners (VBP).

VPB’s founding shareholders, David Deegan and CEO David Carney, will retain a forty per cent share in the business while the group’s management team will retain a twenty per cent stake.

It is the first time the Italian-backed AZ NGA, which traditionally invests in converged accounting and advice businesses, has ventured into the advice supply chain.  

  • According to AZ NGA chief executive Paul Barrett the move makes sense both as a sustainable and profitable investment and as a way to secure capability and capacity during a national labour shortage.

    The traditional route of investing around the dealer group model is an “artefact of the past”, Barrett tells Inside Adviser. The ultimate vision, he explains, is to build the ultimate “advisory utility” business.

    “We see opportunities to invest in key parts of the supply line,” he says. “We formed a view over two years ago that investment in critical elements of the supply chain is going to be the new emerging model.

    “A horizontally integrated strategy makes sense because there are clear bottlenecks in the advice process, such as the production of advice documents, and there’s also a huge war for talent.”

    “The vision is to build the ultimate advisory utility business.

    Uncommon trinity

    Virtual Business Partners is one of the most widely used support services groups in the industry and supports a reported 600 advisers. The service low-cost outsourced services provider has over 1,000 team members, including around 250 paraplanners.   

    “It’s a full-scale talent acquisition management training operation,” he says. “It’s an amazing operation.”

    According to Barrett, the ‘outsourcer’ label is a misnomer.

    “VBP is not an outsourcing company but a human resources partner for advisory businesses looking to increase efficiencies, reduce their cost to serve and improve their net profit margin.”

    The tie-up with Invest Blue – a chain of around 25 individual advice practices operating under the AMP licensing umbrella – gives the partnership an uncommon trinity of capital, advice and support services capabilities.  

    As one of its largest and longest-standing clients, Invest Blue CEO David Stephen says the group had a clear view on how VPB works and the integrity of its systems.

    “We know the people who lead this organisation and the talented people they attract,” he says.

    Like AZ NGA, Invest Blue hopes the connection to a strong service provider will prove an incentive for mergers with other advice and accounting groups.

    “We’re also keen to attract and acquire other like-minded advice businesses, and we have the right structures and processes in place to enable advisers to deliver their client service proposition,” Stephen says. “VBP is a key part of that framework.”

    Tahn Sharpe

    Tahn is managing editor across The Inside Network's three publications.

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