YBR chooses growth over profit

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Yellow Brick Road (YBR) posted a loss of $6.6 million in its annual report for the year to June, despite a 68.4% revenue increase to $24,880,000.

During the course of the year, YBR was focused on expanding beyond mortgages, training more than 75 branches in advice, as part of its ‘road to retiring right’ program. The company also used the popularity of the celebrity apprentice campaign to take advantage of the annual June ‘high season’ for super contributions.

All this has resulted in a 115% increase in the number of people now able to provide some form of advice beyond credit. Fifty-nine percent of representatives that were unable to provide investment advice previously have also had additional training to get the appropriate qualifications.

The training is going both ways, with YBR helping wealth managers gain diplomas in finance and mortgage broking. Non-mortgage transactions have experienced a 138% increase compared to last financial year.

All up, YBR’s footprint has grown to 168 branches across all five states and ACT, with 67 new wealth managers. They have put together 617 SOAs, charged approximately $1m in fees, and FUA has risin to $136m.

YBR executive chairman, Mark Bouris, maintains a positive attitude towards the overall results, claiming that the company’s management team kept overheads flat “when you consider the growth that we have experienced”.

“2013 was very important from a product manufacturing point of view. Our origination agreement with Macquarie Bank assists us to competitively market mortgages and other products under the Yellow Brick Road banner,” he said.

“That in turn helps us recruit further branches and of course increase revenue.”

Bouris says YBR’s focus in 2014 will shift away from product development, manufacturing and promotion and move towards holding cost structure and materially increasing revenue.

“This year will see a closing of the gap between the revenue line and the expense line.”

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  • Innocent Observer on 30/08/2013 1:14:03 PM

    FUA $136m, 617 SoAs across 168 branches?

    Back of the envelope calculation suggests somewhere in the order of $1.5 billion in loans written to make up the $9m increase in revenues (ex SoA fees). Average home loan size in Sydney ~340k = approx. 4.4k loans, suggesting penetration of wealth services to ~14% of client base. In my opinion that leaves significant upside to business development if it's done right, or they could end up like another lender with (second rate?) auxiliary services. Will be interesting to see which way it goes. Bouris does seem to have the Midas touch

  • Ben CFP on 30/08/2013 1:44:54 PM

    Yeah let's see Bouris build his business on the back of 'looking after his client's best interests' and then off-loading his business to the highest bidder. How is that looking after them? Looking after himself more like it!

  • GAB on 30/08/2013 4:51:32 PM

    Sort of ironic how we use SOAs as some sort of measure of producitivy when in reality they are nothing but a drain on productivity and profit.

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