WT Financial Group Limited (WTL) Earnings Call Transcript & Summary

All right. So good morning, everyone, and thank you for joining us for the WT Financial Group Investor Webinar. Today, I am joined by our CEO and Founder, Keith Cullen. Keith, I'm going to jump into it. [Operator Instructions]

Terrific. Thanks, Jane. Thanks, everybody, for joining us -- all right, Jane, you're handing straight to me, are you? Let's get into it then. Ladies and gentlemen, I appreciate this opportunity to take you through our indicative half year results which we released to the market yesterday. I think they're probably best read, for those of you new to the company, in conjunction with our latest annual report and probably our presentation from the full year that we did in September last year, but Jane, let's get into it. We'll start with the disclaimer on the next page, please. I think everybody has probably seen one of these before, but just to say: These are our indicative results we're going with today. We'll also talk about some forward-looking statements, so general advice only. And undue reliance should not be placed on any forward-looking statements. Thanks very much indeed, Jane. We'll move forward to the next page. All right, for those of you new to the company, I'll just give a quick background on what exactly it is that we do and how the company is structured: WT Financial Group Limited. These are our brands and the services we provide. So WT is the listed parent company, and it has a number of wholly owned subsidiaries. And the company is broken into really 2 divisions, our B2B division, which is providing services to businesses; and a B2C division that is providing some services directly to consumers. And I'll probably start from the bottom, up, there because that's the background of our company and where all of our experience lies, as we -- all of the executive team and employees within the business have a great deal of experience in providing financial advice, insurance advice, mortgage broking and accounting services, et cetera, a broad range of financial services direct to consumers. We have a great deal of experience in recruiting and training advisers that we gain through building that business; and also -- and recruiting clients, advertising and marketing and so on. And that's really what led us into our B2B space, which is providing licensing solutions for advice practices. And we have built that business through acquisitions, starting with our original acquisition back in 2018 of an advice network called Wealth Today. And we followed that up in 2020 with the acquisition of Sentry Group, 2022 with the acquisition of Synchron, and then late in 2023 with the acquisition of Millennium3. So that has seen us emerge as one of the largest networks in the country. We have around -- close to 400 advice practices in the country that are operating under one or the other of our licenses and literally hundreds and hundreds of advisers in the network. And for them -- if we flick on to the next page, Jane. Whilst we've got those 4 businesses and we've retained those B2B brand names because -- there's a great deal of sort of legacy sitting and value sitting within those brand names from a B2B perspective, so we wanted to retain those brand names, which we've done. They're really B2B brand names, though, the consumers of the advice practices or the clients of the advice practices that are sitting under our licenses. It's not that those brands are hidden from them, but really they see themselves as dealing with the local business. It might be Mary Smith and associates or Adelaide home loans and financial advice, et cetera. And we're helping our practices underneath those licenses of ours build their own brands and build their own connection with their local communities. So what services are we providing? Well, to start with, we're licensing the practices and therefore licensing the advisers. All financial advisers in Australia need to be attached to an Australian financial services license. They can go and get one themselves. Some practices do that, but most of them see the value of being involved in a business that can provide a really broad range of resources to them, many of which they only need from time to time. So it's not efficient for them to be running their own license in many circumstances. So the practices that sit in our group, we put together their approved product list for them, which is we enter into relationships with the superannuation funds, the fund managers, the insurance companies that enable our advisers to access and use the services and the products of those product providers. We create a full policy suite that helps the practices stay up to date with what the latest laws and regulations are and what the latest regulatory guidance is from the regulators. We provide our advisers ongoing adviser education and training. And whilst our advisers all have a statutory requirement to do a certain number of CPD points, continuous professional development points, each year, our focus is really more than CPD points. It's really helping them become better practitioners and helping them build their practices as well. We provide them a range of consumer engagement and marketing tools. We're responsible for organizing the professional insurance cover -- professional indemnity insurance cover for them. We collect all of their remuneration for them. So we manage the flow of remuneration through their system; and a risk management framework, helping them manage the many inherent risks in financial advising. And really our focus is on helping them manage the risk to client and manage the risk to the advisers themselves. We also provide a range of estate planning services. We have our own law firm that helps our advisers deliver estate planning services, which there's certainly growing demand for when it comes to wealth and personal insurance advice clients. So whilst we've maintained those 4 brand names, we have brought all of the services together under our centralized adviser support and services hub called Wealth Adviser, so it's not like we're providing 4 sets of all of these things. We've really brought these businesses together and rationalized them under a common centralized hub. And importantly that's enabling us to really provide the full range of services across all 4 of those cohorts and to do so in a really efficient manner. As WT Financial Group, we also assist our practices with adviser recruitment and their practice management and support, helping them get more efficient in the delivery of services to their clients; and build better, more profitable businesses. And also we've always provided them with M&A support, merger and acquisition support, and succession planning, but I'll talk more about this later. We're really seeing considerable increased demand for assistance, our practices looking for assistance, with that succession planning and also M&A. I've talked already about our direct-to-consumer business, which is this is much more smaller scale than what it was when we made the decision to move into the advice network space back in 2017, '18 as we sold off a lot of the assets of Spring Financial Group, but we do maintain it as an operating practice providing B2C financial advice; and tax and accounting services; and also estate planning services, of course, I mentioned earlier. We do that ourselves through to retail clients. And we really call this our R&D lab. For us, it enables us to make sure that we're not losing touch with what it's like to run a practice and sit in front of clients every day. All right, Jane, terrific. Thank you. If we could move on to the next slide. Really pleased with these indicative results that we've put out for the first half of financial year 2025. And so you'll see us -- we're expecting to report around a 33.5% increase in revenue and other income across -- or in comparison to the prior corresponding period and about a 35.8% increase in net underlying profit. So we've seen revenue up. We've seen our gross profit margin up. We've seen our EBITDA up, the underlying EBIT up nearly 20% and then the underlying net profit before tax up 35%. So that's what the underlying business looks like. Statutory P&L adjustments, we report these now below that underlying business line; no one-off adjustments for this period, whereas in the prior corresponding period, we had sold a retail mortgage book. That was that $527,000 worth of profit we booked on the sale of that mortgage book. And we had some one-off expenses of $75,000 that we expensed associated with -- it was either that sale or the -- maybe it was legal fees associated with the purchase of Millennium3 that happened during that period. So on a statutory basis is we had a net whatever that works out to be, $400,000-and-something positive impact on the statutory net profit before tax in the last period. I haven't included the tax calculation because it hasn't been finalized yet. Regardless of where the tax lands is -- we're in the fortunate position of having a franking credit balance but also having some accumulated losses from when we did some significant restructuring a few years ago, so regardless of where the tax position would land, obviously with -- there'll be no tax payable at our half year at any rate, but for the full year as well is we don't see that we'll have any cash tax liability arising because of those carryforward losses. That may not be the case next year, but it certainly will be the case for this year. And that will enable us to access those franking credits still. And any dividends for a little while will be fully franked. All right, Jane, we move through the next slide, a summary there of those -- really this was for the release that we're putting out of this today. I've gone through those first few bullet points there. I guess the most pleasing part is that -- the underlying business net profit before tax up around 35% to $2.45 million. Cash or -- and cash equivalents at 31 December a bit over $7 million. They were about $5.3 million at the 31st December 2023. And that $7 million is net of some cash payments that we had out during the period, which was $1.46 million of cash out the door on fully franked dividends during that period. And a little bit over $1 million went out early in the period, which was related to a prior acquisition. And I put that there just to really note that, with all of the acquisitions that we made along the way -- I think with the exception of Millennium3 is the other 3 acquisitions we've done had a mix of upfront and then deferred and upside payments associated with them, so with a number of those acquisitions, those payments were staggered up to sort of 2, 2.5 years. What I can say to you is there's no further obligations with respect to any of our acquisitions. So that $1 million that we -- that went out the door in July was the last of those. Board anticipates a fully franked interim dividend of $0.002 a share. That will bring our declared dividends for the 12 months up to $0.007, which makes a pretty good fully franked return. Okay, next slide, please, Jane. I've included this slide which we had in our full year results deck that we presented back in September just to remind people the sort of trajectory that the business has been on. So I haven't taken into account the half year on these, but I just wanted to remind those that have been following the company for some time the sort of trajectory that we've been on; and also for those that are new to looking at the company, for them to understand what we've managed to achieve through this restructuring and M&A activity over this period of time. So we've delivered 4 consecutive years of revenue and profit growth executing that acquisition and renovation strategy; and really, I guess we call it, redefining the adviser-licensee relationship; and rationalizing our operations and our networks along the way. So it's really been 4 straight years of compounding growth for the underlying period. We returned to paying dividends in -- I think we paid that first dividend, in a long while back, in October. And we're on a path for twice yearly dividends, obviously subject to profits and cash flow. And we're pleased to be able to be indicating that we'll meet that this year with this interim dividend. Next slide, please, Jane. And there is just a little bit about the balance sheet across that same period of time. Again for those that are new to the company is, over that 4-year period, the last 4 financial years, is -- net assets have increased by close to 400% from FY '21 to '24, against an increase in issued capital of just 68%. Assumed liabilities and back-end payments related to all acquisitions have now been satisfied, as I mentioned. And our corporate debt is at a very manageable 6.7% (sic) [ $6.7 million ]. So pretty happy with the shape of the balance sheet as well. Those of you that are new to the company, again, if you take a dive into our last annual report, that will give you some more detail around the balance sheet. Thanks, Jane. If we move on to the next slide. So look. I've been really bullish on the sector for quite a while. And I understand why some people haven't been, in the wake of the Royal Commission, but just to sort of recap: Our industry, the reason we're so excited about it, or our profession, there are incredible tailwinds and a real supply-demand imbalance that has emerged and, we think, provide a significant upside not just -- and look. Our performance, I think, and our outlook is not just reflective of our company and the performance of our team and our network, but we think it's very positive for all advice practices and also for all advice network operators. The fundamentals are pretty straightforward. Adviser numbers have declined in Australia to a little more than 15,000 since the Royal Commission back in 2017, '18. That's a big drop. And there's no way that natural inflow is going to get anywhere near matching the natural outflow from people retiring over the next few years -- is we're seeing only around 400 or 500 financial advice graduates coming out of universities at the moment, so we don't see there being any immediate outlook for a change in the supply side. And so whilst we've seen this incredible decline in financial adviser numbers occurring, the number of consumers in core constituents that are seeking advice and their capacity to pay just continues to grow. I'll just put one little snippet there, if you have a look: Between the last 2 census, the retiree market was up 19%. That's 65-plus market. Now that's against a growth in population, across the same period, a little bit over 8%. So we've got this aging population. And at the same time, the core pool of the asset pool, which is superannuation, that consumers are seeking advice on, it's on this relentless statutory mandated growth trend. I think we're pushing about $2.5 billion of net growth in superannuation assets now, may even be higher than that. We've got -- and that net growth is statutory and voluntary contributions to super, less drawdowns from super from people that are in pension mode and are drawing down out of their super or taking lump sums out; plus the asset growth, well exceeding $2 billion each and every week. So it's been an interesting thing that's happened with financial advice over the last sort of 5 years or so. And that is really it's continued to move from what used to be a mass market industrial model. And it's been replaced by a much narrower professional services model. With advisers now able to generate more revenue dealing with less clients, there's considerable upside that remains in that. I think -- is there's still a lot of advisers out there that have got room to adjust the pricing upwards based on where we're sitting from a supply-demand perspective and certainly relevant to the amount of value that they're adding to clients. So strategically ourselves is we're going to continue to drive paradigm shifts in the licensee-adviser relationship to really help practitioners improve outcomes for themselves, their clients and, of course, our shareholders. And if we flick on to the next slide, Jane. I'll talk some more over the next couple of slides about what those are going to look like. Broadly speaking, I think we're seeing a wealth management boom in Australia. And it's continuing, rapidly expanding market it is, backed up by that mandatory superannuation that I've talked about and demographic tailwinds that are seeing a wall of people and a wall of capital nearing retirement. And to put it in perspective. Australia's pension pool or its superannuation pool is the fifth largest globally. There's over $4 trillion in super assets now. And the reason I keep talking about superannuation is -- if we looked at all of the advised money and clients in our network is I'd say to you around 70% of the advised money in the network would be advice around superannuation assets. There's 2 reasons for that. It's obviously a big pool of capital, but also, since the introduction of compulsory superannuation and the tax advantages associated with using it as a saving and investing tool, people have pushed a lot of voluntary contributions into super as well. So for a lot of people, gone are the days of having a stock broker or an -- and a set of direct investments outside of super. Most people, particularly once they get into their 40s and 50s, once they're heading towards retirement, are really pushing, sensibly pushing, their assets in the superannuation if they don't need to access them, so a lot of assets that might have been held directly 15 -- 10, 15, 20 years ago are really driving that superannuation pool as well. It's not just the mandatory contributions. Either way, there's a steady inflow of funds. And really it's baked in growth for the profession, which is why we say we're seeing a wealth management boom. We've got that aging population that I talked about before. That's increasing demand for financial advice. Latest estimates are there's around 3 million Australians that will become eligible to draw from their super in the next 10 years, so that's 300,000 new clients a year that are getting eligible to draw out of their super. And there's going to be at least $750 billion of funds shifting from accumulation phase to retirement phase. So why this is important is it's really in that run-up to retirement. A lot of people are seeking advice that are younger, in their 20s and 30s. It's pretty rare, but certainly smart accumulators and wealth creators are seeking advice in their late 30s through to their 40s. But those that haven't, it really comes into focus as they get close to retirement. And that is where there's an enormous amount of demand that's coming into play now. So as more superannuation members are getting close to and hitting that retirement phase, they're needing advice more frequently on more complex issues. And that's when they need the help of a financial adviser. Most of them are seeking holistic advice, so they're not just looking for advice around the super. To give them proper advice about what they should be doing with their super, advisers need to really look at what their circumstances are more broadly as well, how their assets are structured and their cash and their cash flow are structured outside of superannuation. So this is where advisers come to the fore and can have an enormous impact. And I often get asked. What sort of -- what's the ideal client look like? It's not necessarily that advisers are looking to deal with high net worth or ultra-high net worth, although we certainly have plenty of those within the very significant client base that our advisers deal with. Really a lot of -- the average consumer now, with the right advice on how to structure themselves in the run-up to retirement and at retirement -- the right advice can have a very material impact even when we're only talking about smaller balances. So the result of all these tailwinds and the boom that's going on is there is a significant unmet demand for advice. It's really giving pricing power to quality advice firms. Next slide, please, Jane. That's -- very important to us before I duck into this is why does it matter that our advisers' revenue is going up. Well, this is not the same with all advice network operators, but how we earn our fees and make our profit is -- the services we're providing our advice network, our practices in the group is made up of a number of both fixed and variable components. So with all of our practices, we are charging them a fixed fee relevant to their practice and then normally a per-adviser fee. And then we're sharing in the revenue and therefore sharing in the upside with them, which is where we're always motivated to help them get more efficient about running their businesses and make sure that they're maximizing their revenue opportunities. So we've got that blend of both fixed and variable fees. So there's really some forces driving industry consolidation at the moment. We've seen a lot of industry consolidation obviously across advice networks across the last 5 years. We've seen the banks and AMP and the insurers sort of exiting the advice network space in the wake of the Royal Commission. And then we've seen a lot of M&A activity in our space. I've mentioned already the 4 acquisitions, the businesses that we've put together since the Royal Commission in 2017, '18. There's been a lot of other activity going on. And that's really been -- what's been driving that has been it's getting increasingly complex to provide advice. And the services that practitioners are requiring out of their advice network operators is increasing, so you need scale to be able to do that and do that properly. The days -- those of you that are online that know the financial services sector, brokers and others that have been around the wealth management space will be familiar with the old concept of sort of renting a license, operating under someone's AFSL; and then the AFSL not really doing much for that other than providing the licensing. Those days are long gone behind us for smart practices. They're really looking for a very broad range of services and support. And they're also wanting to make sure that the risks that are inherent in providing advice are properly managed within their business, so to do that and do it well, you absolutely need to have scale in the business, which is what we've been able to achieve through our acquisitions and through bringing everything together under that centralized support hub that I mentioned before. What we're seeing increasingly now too, though, is significant M&A activity in the underlying practices. And the regulatory complexity and the choke hold on the supply of human resources has really started to favor larger, well-capitalized firms that can leverage those resources. With that -- what has restricted the supply of advisers and will continue to do for a considerable amount of time, we see -- and I'll talk more on this issue as we move on. What constitutes a relevant degree to become a financial adviser was cast by the previous government to be a very narrow set of degrees. So if I look at the number of people that were graduating courses like commerce and economics and finance and accounting last year, we're talking about tens and tens of thousands of people. Out of those, there was only about 500 that came out of university with what's called a relevant degree that would put them in a position to be able to start a professional year, so that's nowhere near enough, so there's real demand for human resources. And that's meaning that firms, to grow, are really needing to acquire advisers, if you like. And that's driving a lot of M&A activity. Obviously scale efficiencies in technology, administration, marketing and risk management are key competitive advantages for practices. This is seeing smaller practices increasingly joining or selling to larger practices to maximize those outcomes, so as demand continues to grow and as the number of advisers has plummeted and, say -- let's say, were stabilizing or staying at around this 15,000 mark at the moment, to grow a business, you're going to need to be spending more time sitting in front of more clients. So I'd say to you that, over the last 10 years as we moved out of this mass market model, the average adviser in Australia used to be dealing with maybe 200, 250 clients on average. That number has dropped to around 120 on average. Practices that come together with others so that they can operate a really efficient set of processes and get scale advantages are freeing up more time for their advisers to do less administrative work and more client-facing work that, we're hoping, particularly with the advent of new technology solutions that are coming into the market, to see that number, 120, go back up towards 150, 180, 200. And so we're seeing that we're going to help our practices drive significant growth through becoming more efficient. There's big demand out there for practices. Private equity firms from all around the world are targeting Australian advice practices and also wealth management more generally. We're seeing global players hitting Australia because they're seeing it as stable, high growth. And they're seeing an opportunity for valuations that are at a discount to what they would need to pay internationally, so that's attracting a lot of interest globally. Recent deals are really emphasizing the attractive valuations in the mid-market advice sector here in Australia, and this is twofold. As global operators are coming into the Australian market, they're looking at valuations here, bidding up the value of practices, which is fantastic. Valuations we're seeing at the moment are definitely on an upward trend, but they're still well below what these global players would need to play if -- pay if they were playing in their local markets, so we see that there's going to be considerable more attention paid to the Australian advice market. Obviously, as one of the largest network operators in the country, we're very enthusiastic about that trend. Next slide, please, Jane. Why invest in the Australian market? Great recurring revenue models from ongoing client fees. So advice practices and us as a network operator benefit from those ongoing fees with clients. Certainly there's a number of -- or a reasonable amount of upfront revenue in the market when advisers are dealing with clients for the first time, but predominantly the value is sitting in the ongoing relationship with clients, with clients paying ongoing fees to advisers for ongoing advice. There's also ongoing commissions associated with personal insurance products, life insurance and total and permanent disability and income protection and so on, so we've got these recurring revenue models, in many cases linked to asset value. So you've got not just the ongoing fees, but you've kind of got that baked-in growth from the value of the assets growing. And also, those with superannuation, there have been that baked-in statutory growth from statutory contributions and voluntary contributions as well, of course. So we think strong industry fundamentals that are underpinned by that superannuation growth that's fueled by statutory contributions. Obviously the contributions go up with wages growth as well. We're seeing attractive valuations to (sic) [ compared to ] the global peers and that's attracting capital into the market, so we think there's significant opportunity for advice practices to scale swiftly with M&A in what remains a relatively fragmented market. So we flick on to the next slide, please, Jane. Why WT? Well, we think we're in a unique position strategically. We have got a proven track record of success in M&A with a model that's been fine tuned for scale in an increasingly consolidating market. We've kept this multi-brand strategy serving a really broad adviser and client base, but we're doing so from a centralized support hub that provides efficiency in service delivery and, of course, consistency in outcomes in our dealings with our advisers. We've got a proven track record of integrating those acquisitions and driving the synergies, focus on mid-market acquisitions with attractive returns. We've done that. We're getting great return on capital. And look: When opportunities present, we're positioned to further scale if they do. Now what I'd say is this. We're helping our practices grow. And we're really motivated to help our practices grow because we've got that revenue share arrangement with them so we've got perfect alignment with them. And we're increasingly working with our practices to further modernize their businesses through both technology and corporatization initiatives. Some of the stuff that's happening with AI is absolutely fantastic for the advice profession, not so much in terms of giving advice to consumers, although we think opportunities open up there, but most definitely in terms of giving practitioners more time to sit in front of clients: through doing an incredible amount of work recording meetings like this that they're having with clients, producing file notes, producing follow-up materials for the clients. It's incredible, what some of this AI is doing in terms of making more time available [ for ] practitioners, which we're certainly helping them with. And that will help them achieve more face time with clients as this supply-demand imbalance prevails. What we're seeing also is increased demand from practices, both within our network and also external to the network, for support and advice around facilitating M&A activity, including our practices are looking to us to help them access debt and also equity markets and support in -- and support with their legal and due diligence programs. We're very well positioned to play a key role in that with considerable experience both at a Board level and corporately and at an executive level in our business with M&A activity, so we think we're really well positioned to play a key role and respond to that demand that we're seeing out of our practices. And this presents exciting, new revenue and profit opportunities for the business. Jane, if we flick on to the next slide. In conclusion: WTL is positioned well for growth. What I'd say to you is we think now is the time to consider investing in or increasing exposure not just to WTL but also to the sector so that you can share in this upside. From WTL's perspective, we're well positioned to harness the growth and consolidation. And I think we've shown consistently over the last 4 or 5 years now that we've been able to really do that through M&A momentum. We think it's set to continue. Demand for advice continues rising. Supply of advisers is constrained. Pretty basic fundamentals and now, I think, a strong track record proven out of the executive team here at WTL on delivering upon what we set out to do when we embarked on this sort of transition to be B2B focused back in 2018. Jane, I think we've got a couple more slides here. I won't bore people with the details of them, but we did want to include them. Those of you that don't know us is -- really brief bios on the Board; and then, next page, Jane, leading executives as well. What I can say to you is a really well-rounded-out and broad range of executives there. If you hop on to our website as well, WT financial group -- wtfglimited.com, you'll see a full depth of the management team there as well going down and including really all of our senior management across the country, including our team of regional managers, so I'd encourage you to have a look at that. Whether you're new to the company or whether you've been following the company for a while, please go and have a look. And you'll see that we've assembled a bloody good team with a heck of a lot of experience that our network can really benefit from. Next slide, please, Jane, final one there. I just thought I -- it's worth saying before we wrap up: founder-led business with backing of some really experienced institutional investors that understand the financial advice space. So Board and shareholders sitting -- Board and management sitting at around 30% of the business, so you know that our interests are aligned with your interests as shareholders or potential shareholders; and backing from a really good range of long-term investors in the business that have backed our vision. Thanks very much indeed. That wraps it up, and we'll move into Q&A. And I know, Jane, if you're there, as -- I've had a couple sent directly to me that I flicked through to you. And I think you'd -- you received some others as well, but obviously we'll open up the Q&A as well, Q&A chat function.

Yes, absolutely. [Operator Instructions] But let me kick these off.

So -- and Keith, you touched on this in your presentation, but so with the increased M&A and larger-scale advice firms emerging, do you see a future for individual sole practitioners?

Yes. Look. Absolutely, Jane. There's no question. And look. My daughter might end up being one of those. She's sort of just getting towards the end of high school now and thinking about what she's going to do at university. I'd certainly encourage her to move into the space. And there's no reason that a bright youngster coming out of school -- I wouldn't -- I'd be happy to encourage them to hang a shingle out and start their own business. And so -- and then look: There's a lot of people that are quite happy working by themselves. It's interesting when we talk about single-adviser practices, though. I wouldn't have the view, when somebody talks about a single-adviser practice, of someone sort of working in their kitchen at home by themselves. A lot of single-adviser practices are actually a practitioner inside a multidisciplinary business, mortgage broking and/or accounting practice, et cetera. So we see quite a bit of that in the advisers that we have in our group. Whilst there's only one adviser, they're not a one-man band. They've got a partner or 2 or 3 or 4 who are accountants and/or mortgage brokers. And then they've got a support team around them as well, so whilst it might present as a -- single-adviser practices, you might be talking about a business with half a dozen or a dozen people in it still, so there's absolutely a future for that, no questions at all. And many -- and look. We love supporting single-advice practices. We're one of the few licensees, I think, left about that has actually got a model and will support start-ups. And I'd say we've got a number of start-ups in the group that have started with us just, say, in the last 12 months or so that maybe have left a salaried position or somewhere. So we don't discourage that at all, but those that are looking to maximize their asset value; and certainly the ones that are looking towards retirement that might be in their 50s, even hitting towards their late 50s or early 60s now, that might have been a single practitioner, they're going, "Well, how am I going to maximize my asset value and my outcome for when I am ready to exit?" And there's certainly a great deal of options for them to do that and maximize their outcome by coming into a larger practice. We've got a few we're working with at the moment; and 4 advisers, say, that just spring to mind at the moment, all looking at coming together to form one larger business. 3 of them are looking to retire as early as 2 years and as late as 7 years. And they're saying, gee, well, in that next 2, 3, 4, 5, 6, 7 years, if I stay as a single-adviser practice -- or a couple of them are actually multi-adviser practices [ that are ] coming together to create something much bigger. "If we stay in this smaller framework we're in now, I'm doing everything. I'm running my administration. I'm running my marketing. I'm running my tech strategy. I'm spending time doing that." If we come together into a bigger structure, it's the same amount of effort to do that across a much bigger business and the same amount of staffing to do it across much bigger business as what it is to do across 4 smaller businesses. And these practitioners are going, "Wow, that will give us an incredible amount of time to make rain and sit with more clients and sign new clients up and really maximize the value of our asset over the next sort of 2, 3, 4, 5, 6 years," depending upon when they're ready to retire. So I'll just stay on that point because there's a question popped up in the Q&A there of our licensed practices as how many single-adviser practices are there. Look. I'm telling you I think we've got about 520. They're personal advice advisers -- and about -- another 40 or 50-odd general advice advisers in the network. And I'm not exactly sure what the practice number is. Well, I think it's less than 400, not much less than it. So that will tell you there's particularly -- look. Most of those GA advisers, those general advice advisers, are single-adviser practices, so that accounts for them. Look. It's probably around half of the practices, I'd say, but again, don't think about them as one-man bands. I'd think about them as probably sitting inside a bigger business.

Thank you, Keith. You're right. There's quite a few questions coming through, so I'll get through them. Next one: So do you foresee further consolidation coming in at the licensing level?

Look. I probably do. And it's -- certainly, acquisition is not a key strategy of ours now. We've achieved the right sort of scale that we need to underwrite all of the critical supports that we think practices are demanding. So I won't say no to acquisition opportunities. I think there's a number of subscale operators out there that are really -- probably going to look to consolidate either amongst themselves or into larger groups, but it's not driving us. Neither of them -- look. We'd love more advisers. Don't get me wrong. More -- and we love hanging onto advisers, but it's not the core driver for us now. Our focus is on making sure we're helping practices become more profitable and drive their own revenue and build their own asset base. And in doing so -- that's why we love being so closely aligned with the way that our arrangements are structured with them, is we're all on the same page as achieving that outcome. If we help them become bigger, better, stronger is we become bigger, better, stronger and more profitable for our shareholders as well.

Thank you, Keith. So next one. "The minister for financial services has quit the government, with no replacement due before the election, so in your opinion, does this end the chances for further reforms?"

Look. There's one key reform that we need in this profession, and that is so that we can all get back to growing and actually growing the profession. And that's a change to what constitutes a relevant degree. And look. I think we'll see that regardless of who makes government next. I don't think we'll see any further legislative changes before this election, though, so the answer might be, for -- in the immediate future, it probably does see an end to it.

Thank you for that, Keith. Okay, next one. So do you see the supply side of advice changing in the future?

Well, no time soon because of that relevant degree issue, but I tell you I say to anyone that will listen, and we've been saying it for years, it needs to be fixed; is when kids come out of high school, they're not ready to make a decision about doing such a narrowly cast degree as a financial advice degree or a financial planning degree. They're thinking about doing finance, economics, commerce, business and commerce, business and law, what we thought a relevant degree was going to mean. And we've got to get back to that. Kids -- last year, I think, there was something like 30,000 commerce graduates. I'd -- our practices would love to be able to recruit those commerce graduates, put them straight into a professional year, give them some relevant vocational training around the specifics of advice and get them sitting in front of clients -- is we need to get back to that. And I think we will within the next couple of few years. And that will be great because it presents new opportunities then to actually grow the profession. And so let's hope so, but I don't see it changing immediately, not -- certainly not in the next couple of years.

Thank you, Keith. As a complement here: So the growth has been impressive, but how do you see that being sustained?

Well, I think it will be a different style of growth, Jane, as I think -- I've talked today about the emerging revenue opportunities that -- our practices seeking advice from us around assistance with their M&A and around helping them access debt and capital markets and providing them with advice around bringing themselves together with other practices. And we're seeing that demand from outside the group as well. And obviously there's an opportunity for us to keep driving the revenue lines of the practices, which in and of itself sees us growing, so yes. A different type of growth, but that's where our focus is, is in continuing to improve not just the quantity of the outcomes but the quality of the outcomes.

All right, the next one. "Your PE has been below 8x until recently. And it's still only around 10x or 11x prior year earnings. So what accounts for this? And why do you think that will change?"

Our PE, Jane, did you say?

Yes.

Yes. Look. I think we've just got -- we're pushing perhaps close to 12x prior year earnings now, but it's true, is that -- I mean it's very frustrating for us with it trailing down around sort of 8x or less than 6x EBIT for a long period of time there. I think we're seeing the market start to respond now. If I'd reflect: Why is our own PE being down there? Look. In fairness, we moved into the advice network space through a relatively modest acquisition back in 2018. And people have seen us make subsequent acquisitions and they've probably gone, "Sounds great, Keith. Let's see how you go," big execution risk associated with such a bold acquisition strategy as we've embarked on. I reckon now we've proven that we've been able to execute on it, if you look at the last 4 years and the consistent growth. And so I'd say that people are now saying -- well, I think execution risk always -- day-to-day management risk is always there, but I think the execution risk around the acquisition strategy is gone. And I think, as we've got back to paying dividends, people have said, "Well, let's start to mark WTL up on the basis of that track record that we've seen emerging and that risk having gone." I think -- if you look at us against our peers, I think Morningstar tells us that the sector is trading at about 13.5. And I would have thought, given our growth profile, we deserve to be above that. So I think we can only keep doing what we're doing, which is delivering, and hope that people wake up to the upside, not just with us but in the market generally, that clearly this global capital is awake too. So let's not give all of the upside to the global capital. And let's keep encouraging Australian investors to look more closely at not just us but the sector more generally.

Thank you, Keith. Okay, next one. So what are the longer-term risks to capital in the sector?

Yes, a really good question, Jane. The -- look. There's always the regulatory risk in a highly regulated market like this, but I think we've been through tumultuous periods, going back to the Future of Financial Advice reforms in 2012 and the Life Insurance Framework review and then the Royal Commission. I mean I think, if anything, we're going to see the regulatory burden released rather than it -- make it more difficult -- make things more difficult. Certainly both sides of government have been talking about that, if you can take that at face value, so I think that risk is less than what it might otherwise be in a heavily regulated professional industry like ours. The -- and I think -- I don't see any brave government meddling with compulsory superannuation statutory contributions and so on anytime soon. And the meddling that they do, do around superannuation just makes people need advice. We wish they'd leave it alone, frankly, but the more complicated they make it on consumers with changes to tax and contribution rates and so on, the more people need advice. So I'd say probably the biggest risk to capital would be that -- exactly what the attraction to capital is at the moment, which is the supply-demand imbalance. In the longer term, we definitely need to get that supply side fixed. Otherwise, we'll go forward 10 years time and then we don't want to sit in front of many clients. The business, it will be like having a legal profession that only included a King's Counsel. That's what it will look like. It will get fixed. I feel very confident of it. And that will again let us ride this wave of supply-demand imbalance and then a new wave of really expanding the profession over the following period as it does get fixed, but that would be the #1 risk.

Thanks, Keith. Okay, we've got another one that's just come up and we've got a little bit more time. "So how do you see AI changing the provision of adviser services? And what activities are you undertaking to leverage the opportunities provided by AI?"

Yes. Look. It's really exciting. We run a lot of adviser groups and a lot of adviser education and training for our advisers, so we're always talking to them about this, but we also run -- our regional managers get together the principles of all of their practices in smaller groups, that we call our optimum peer groups, on a really regular basis. And I love the few of those meetings I've dropped into. And the feedback I get back from the regional manager is incredible, an amazing amount of innovation going on. We've got -- so many of our practices are trying so many different things. I'd say to you that the most consistent theme we're seeing is really in helping on the administrative side. And that's just things like recording meetings. I have meetings online with a number of our advisers, obviously. And increasingly, within 5 minutes of the meeting being over is they're shooting me back a set of file notes and a summary of follow-up points and action items from the meeting. That sort of technology is incredibly valuable in the advice space when you think about it's your face-to-face meetings with your clients and the following up on the action items both in terms of managing the workflow inside the business with your team that's supporting the clients and also with the clients themselves. Gone are the days of smart advisers spending 2 hours, before they go home at night, with a yellow pad, writing out all of their file notes to put into the file and to hand out to their admin team to execute on implementation stuff the following day. It's all done within a minute or 2 of the meeting being over. And that's presenting incredible opportunity. For the advisers that are already working too hard, that's giving them some time to spend with their family and recharge their batteries. For those that are wanting to keep driving and building their asset value, it's giving them more face time with clients. And I'd say it's that type of tech in the business managing workflows and file structures that is really delivering the best value for now. And certainly, ourselves, we're investing heavily in it to help us in the risk management framework, getting more efficient and more consistent outcomes there as well, so -- and goodness knows where it's going to go.

Okay, Keith, we're running out of time, but finally, what should investors look forward to over the next 3 to 6 months from a news flow perspective?

Well, I mean, I think, keep an eye out, obviously, for the full year results. And keep an eye out for this increased activity around M&A within the network because I think that's presenting enormous opportunity. And I'd just encourage everyone to have a look at the incredible amount of activity in wealth management generally, in the superannuation space and in the advice space; the incredible amount of capital being attracted to the market from offshore. It's for a reason: The fundamentals are right. And so I just see someone, Jane. [ Mike ] here has dropped something in. Let me see if I can get the essence of his question. "New to the company, trying to define the essence of the business model based on [indiscernible]." I think so, [ Mike ]. I think -- [ Mike ] said, is this similar to the -- he's new to the company. So are the services that WT is providing similar to what the picks and shovels or the services companies might provide in the resources space? Not dissimilar to it at all. We're definitely providing a broad range of services, but fundamental to it is this. If you compare that to resources, imagine that we're licensing the project as well. So every adviser in the country needs to be attached to a financial services license, so we're providing that licensing. As such, we're responsible for the conduct of the advisers, which means we're responsible to make sure that they're well trained and well up to speed with what all of the requirements are, but you hit the nail on the head. We do share in the revenue with them and so we're very motivated to help them. It's not like they're just renting space office and renting services office. We're really motivated to help them grow their businesses and their profitability.

Wonderful. Well, that is all we have time for today, Keith. If we missed any of your questions, I encourage attendees to reach out via the contact details on our ASX releases. And then we can organize a meeting with Keith and the team. But thanks again. And we look forward to hosting you next time.

Thanks, Jane. And thanks, everyone, for joining us. I appreciate the opportunity.