How WealthO2 added an ‘X factor’ in board restructure
A small coterie of now well-heeled technology entrepreneurs is responsible for much of the progress seen in that segment of the Australian investment advice landscape for the past 25-or-so years, mostly starting in the days of dial-up modems.
Two of them have just joined the board of the latest financial adviser systems firm, the four-year-old WealthO2, which last year passed the $2.3 billion mark for funds under management – Neil Roderick, as chairman, and Darren Pettiona as an executive director.
Their CVs would pepper a modern history of financial services innovations, if there was such a reference book. Roderick spent 14 years at Macquarie, retiring in 2013, during which he not only led the growth effort for the Cash Management Trust, Australia’s oldest and largest, but was also instrumental in building and delivering the Macquarie Wrap, when he was the bank’s head of advice, and the launch of the Professional Series business for advisers, and retail life insurance business.
Pettiona, whose career in the space also goes back to the mid-1990s, first showed a knack for disrupting an entrenched market when he brought a Nasdaq-listed portfolio systems company called Advent (now a part of SS&C) to Australia, through a distribution agreement, and then moved on, by 1998, to build Australia’s first online broker, at eCorp. He still remembers words said to him by one of the biggest brokers in town that still resonate with him today: “Son, you’re a fool. People will never buy shares online. They need a broker.”
But Pettiona is probably best known as one of the founders of what became Coin Software, with long-time colleagues Ian Litster and Suwandi Tan. Coin was sold to Macquarie, under Roderick’s oversight, in 2005 for $32 million, and then sold to Rubik in 2012.
While developing the Coin business, Pettiona had worked out of the van Eyk Research offices, after doing a deal to become the first planner systems provider to gain access to the full suite of van Eyk’s research, which in turn gave Coin the best client list of dealer groups in Australia. Van Eyk became a small shareholder in Coin and Pettiona became a non-executive director of van Eyk, leaving the firm before control changed hands (it was eventually placed into liquidation.)
After helping out at Macquarie for a couple of years, Pettiona turned his mind to HUB 24. With HUB 24, he, Litster and Tan saw the opportunity to build an influential position in the nascent managed accounts market. They did this at the listed Investorfirst (later renamed HUB 24), where Pettiona became chief executive. He left in 2012, along with some others including chair Otto Buttula, after a power struggle.
Pettiona is sanguine about the evolution of innovative companies into much larger organisations. “Entrepreneurs only last so long in a business,” he says, “because it gets to a point where they don’t want to manage the day-to-day operations. In fact, they can become destructive. I’ve been lucky along the way with two great partners that have different skill sets, there’s very little demarcation. Great partners are the key to any successful business.”
Shannon Bernasconi, the chief executive and co-founder of WealthO2, describes Pettiona as the firm’s “X factor.” She attracted his attention away from his latest technology venture, which is outside the financial advice sector, for at least part of his time, and he introduced her to Roderick for the chairman’s role.
At first glance it might look like a form of takeover by Pettiona and Roderick but Bernasconi, a seasoned financial services executive, says that both sides did their due diligence. And some other people were interviewed for the chairman’s spot. Pettiona agrees with Bernasconi that Roderick is more suited to the chairman’s position.
“We’re not there to force a new strategy on Shannon,” Pettiona says. The board appointments were based on a strategy which Bernasconi is leading. He sees his role as an executive director to run some ideas past Shannon “who has a whole raft of ideas to bounce off us,” he says.
“At the end of the day, it does need to stoke up the industry. There’s been a lot of negative press around advisers and COVID has been good for their communications with their clients. But there has been a dispersion in the value chain in recent years.
“When we had Coin, dealer groups paid for and mandated all services for advisers. Advisers didn’t have a choice. That’s not the case anymore. With the decoupling of banks from the wealth management sector and the emergence of more self-licensing we will move into a new best-of-breed environment, where the movement in technology is more fluid.”
Bernasconi says: “Wealth02 now has a four-year track record implementing alternative solutions. We are a true alternative. We now want to take it further into the industry. It’s all about helping the adviser but it’s a new technology with a different way of approaching the industry.”
Before Wealth02 beckoned, Pettiona thought he would not get back into the financial advice business. He has spent most of the past seven years working with Litster and Tan on a venture called Midas, using their own capital to build a global operation, which required a lot of travel until last year. He is reluctant to describe the business in detail but says: “It’s a bit like a hedge fund.”
He says he will continue doing what’s he’s done for the bulk of his career – looking for innovative ways to do things. “I’m only 51. I’d get bored if I wasn’t doing this.”