NZ Funds, which has been a part owner for the past two years is taking full ownership of the company and plans to close it down; at the same time creating at least 14 new, independent advisory firms.

Under the deal NZ Funds has negotiated to buy the MMG franchises back and help the firms establish themselves as separate, independently-owned financial advisory businesses.

Currently MMG has 17 firms around the country and about $700 million under management. Of that money around $350 million is with NZ Funds. The other main areas it is invested in are DNZ, Centro Properties and LM Investments.

So far 14 have decided to become stand alone business and the others are considering their futures.

NZ Funds will provide services to these firms, however the new firms can use other products .

NZ Funds chief executive Richard James says there is a process around this for firms to follow. Where appropriate for their clients, the new advisory businesses will continue to utilise NZ Funds’ proprietary advice technologies and the Assyst investment platform.

The MMG franchisor business will be progressively wound down as individual arrangements are reached with each of the remaining franchisees.

James said “a number of the MMG franchisee businesses are large and successful enterprises run by high quality, high integrity advisers. We strongly believe that those businesses will thrive in the coming environment and continue to be supported by a large and loyal client base”.

He new firms will be fee-based as NZ Funds won’t be paying trail fees.

James believes the big corporate financial advisory models are not right for New Zealand. “Contrary to the widely held view that being part of an institution will be prerequisite as we move into a regulated financial advice regime, the clear preference expressed by MMG’s investor client base has been a desire to deal with a locally owned and operated advisory firm."

He says clients want to deal with local independent firms where they can talk to the principal. He says this is how accounting, doctors and other professions work.

James says while the move was made primarily to help the advisory firms grow their businesses. Under the corporate model there were a lot of overheads and these aren’t required in an advisory business. He acknowledges that although the firm had dumped the Money Managers name and rebranded ther brand damage was considered in the move.

As NZ Funds is taking full ownership of MMG it will also be the end of Money Managers founder Doug Somers-Edgar in the advisory business.