Rob Coombe

Generation Development Group (ASX: GDG) has entered into a binding agreement to acquire 100% of Evidentia Group (Evidentia), significantly strengthening its position in the rapidly growing managed accounts market, which is currently valued at over $200 billion^[1]. The managed accounts sector is expected to grow at an impressive 15% per annum from 2024 to 2030.^[2]

Founded in 2018, Evidentia is Australia’s leading provider of tailored managed account and investment management solutions with $12.7 billion in funds under management (FUM), presenting an exceptional growth opportunity for Generation Development Group.

Generation Development Group’s acquisition of Evidentia and subsequent merger with Lonsec Investment Solutions will bring together two of the leading and fastest growing managed account providers as the undisputed leader in the market, with a combined total of over $25 billion FUM. By merging their collective strengths, Generation Development Group will provide leading end-to-end investment management and managed account solutions for licensees, financial advisers, and their clients. The newly formed business will be branded as Evidentia Group.

Rob Coombe, Executive Chairman of Generation Development Group, said: “I’m incredibly excited to be welcoming the talented team at Evidentia to the Group. We look forward to continuing to invest in the combined business to drive growth in one of the most dynamic areas in the wealth management industry in Australia.”

Over the past decade in Australia, the demand for separately managed accounts (SMAs) and managed discretionary accounts (MDAs) has grown rapidly, driven by structural changes in wealth management and increasingly sophisticated investor needs. This growth is reflected in a 27% p.a. increase in the size of the managed accounts market, from $80 billion in 2020 to $206 billion in 2024^[3]. This demand is being driven by licensees and financial advisers focused on delivering better client outcomes and enhancing the overall client experience, while also improving operational efficiency and managing business risks.

Grant Hackett, Group Chief Executive Officer of Generation Development Group, said: “This acquisition is a highly strategic and attractive opportunity that is perfectly aligned to Generation Development Group’s broader growth strategy, following the acquisition of Lonsec Group. The Group expects the managed accounts market to grow to $474 billion by 2030^[4]. Both Evidentia and Lonsec Investment Solutions have been among the fastest-growing businesses in the industry, and together, they will create a clear and undisputed market leader in the rapidly growing managed accounts sector.”

Managed accounts are considered the next evolution in Australian wealth management, similar to the rise of investment platforms over the past 25 years. They simplify administrative burdens, allow for customisation of portfolios, and enhance communication and scalability. These benefits deliver a more personalised investment experience, improved after-tax performance and investment outcomes.

Re-shaped businesses and executive teams

The acquisition of Evidentia has provided Generation Development Group the timely opportunity to reshape and strategically align its businesses to deliver growth. This will ensure it continues to deliver exceptional performance and enhance its customer propositions across each of its products and brands. Moving forward, Generation Development Group will operate three distinct businesses: Generation Life, Lonsec Research and Ratings, and Evidentia Group, which will be formed through the merger of the Evidentia and Lonsec Investment Solutions businesses.

Peter Smith and Michael Wright will lead the newly formed Evidentia Group. Peter Smith, co-founder, Chief Executive Officer and Chairman of Evidentia, will assume the role of Executive Chairman at Evidentia Group and join the Board of Generation Development Group. Michael Wright, who has served as Group Chief Executive Officer of the Lonsec Group, will assume the role of Chief Executive Officer at Evidentia Group.

Peter Smith, Executive Chairman of Evidentia, said: “The combination of Evidentia and Lonsec Investment Solutions will continue to build upon the expanded team of over 30 investment management professionals, adding more experienced portfolio managers with strong financial advice expertise, and specialist resources including strategy-based portfolio design and business support. Working groups have been established to evaluate client-focused benefits due to the scale of the combined business, ensuring all benefits created are realised and reinvested back into the business, creating a stronger value proposition for our financial advisers and clients.”

Lonsec Research and Ratings will operate as a stand-alone business, with the Lonsec brands – SuperRatings and iRate aligning under it, bringing all the collective research strengths and areas of key excellence into one business unit. Lorraine Robinson has been appointed Chief Executive Officer of Lonsec Research and Ratings, previously serving as Executive Director of Lonsec Research, which has grown to become one of Australia’s largest and most respected providers of investment research for the financial services sector, evaluating and rating over 1,800 managed investments, listed securities, and superannuation funds. Generation Development Group will further build upon this momentum and is dedicated to investing in the growth and continued success of the research business.

Michael Wright, Chief Executive Officer of Evidentia, said: “Bringing together Evidentia and Lonsec Investment Solutions is an exciting next step in our rapid growth journey for both our managed account and research businesses, as well as the broader Generation Development Group. It also provides a logical and timely opportunity to merge Evidentia with Lonsec Investment Solutions while establishing Lonsec Research and Ratings as a stand-alone business, enabling each brand to focus on their core strengths and value propositions and preparing each business unit for their next evolution of growth.”

Amanda Smerdon has been appointed to work alongside Grant Hackett, Group Chief Executive Officer at Generation Development Group, to help lead the Group’s transformation. As part of her role, she will work alongside key executives to oversee the separation of the newly formed Evidentia Group and Lonsec Research and Ratings businesses, to transition shared services in a phased approach. This will ensure each business remains independent and is structured to maximise performance and superior market-leading client outcomes.

This transaction and the strategic alignment of Generation Development Group’s businesses will continue to deliver best-in-class investment solutions and services from Generation Life, Lonsec Research and Ratings, and Evidentia Group, further strengthening our growth strategy. The Group remains committed to adding value and upholding the high standards of service that clients expect as market leaders across each of its products and brands.

The transaction is expected to complete in mid February 2025 following completion of an associated capital raise.

———-
Notes:
[1] IMAP (Jun-20-24), NMG Consulting (historical SMA type splits and all forecasts including the treatment of MDA as including MDAs, IMAs and other discretionary with no roll-forward or adjustment for MDA managers that did not provide data to IMAP in Jun-24
[2] Ibid
[3] Ibid
[4] Ibid

The post Evidentia to join Generation Development Group appeared first on AdviserVoice.

“We know there are multiple, real money worries affecting Australians that require sensible solutions. Issues like first home affordability, education funding, or worrying about outliving your life savings – are present concerns for Australians at different stages of their lives

“Additional uncertainty and a sense of mistrust around the constant changes affecting superannuation, create a strong argument, we believe, to think about alternative ways to save for long-term goals,” he said.

“In the past few years we have seen literally hundreds of changes to superannuation rules and most of these are to the disadvantage of contributors. For example, we have seen the preservation age creep from 55 to 60 years old, an increase in tax on concessional contributions and a reduction in amounts that can be contributed into superannuation.
“This has increased the levels of mistrust in the retirement savings system by Australians,” said Mr. Coombe.

Mr. Coombe also highlighted the present issue of housing and education affordability for younger Australians, and the impact of these issues on family budgets and relationships.

“Parents with children are also very worried that their kids won’t get the same start in life as they did. Property is more expensive, as is the cost of private schooling and higher education. Parents want to help their children fund these needs. The financial demands on Australians are growing and existing financial institutions just don’t seem to be addressing these real issues,” said Mr. Coombe.

A New Brand, a revamped product range and a new management team

Generation Life is a specialist issuer of Investment Bonds. The company was founded over 15 years ago, during which time it has been entrusted with more than $1 billion by Australians investing to pursue a range of long-term savings goals.

Investment Bonds are tax paid investments, which means when its earnings are received by the insurance company, they are taxed at the corporate tax rate of 30%. This makes a Bond a tax effective long-term investment for those with a marginal tax rate higher than 30%.

“Investment Bonds are particularly useful for people who are unable to contribute to superannuation or those that can, but fear locking it away in an environment where there is constant change,” he said.

Bonds have also been widely used by Australians to help fund other long-term goals such as children’s education or to help provide for a deposit on a first home.
“With Investment Bonds, there is no limit on how much can be invested and no preservation age. Combined with a tax environment significantly less than the top marginal tax rate and the ability to borrow against the investment, bonds are an ideal long-term savings vehicle,” said Mr. Coombe.

With the rebranding to Generation Life, Mr. Coombe announced a range of new product features, such as tiered pricing, additional investment options and a range of great value index funds.

“We have been growing our market share for many years and with our new offering, we believe that there is now daylight between ourselves and other competitors in this space. This has come at the right time as we are seeing renewed inquiry and investment given recent changes in superannuation.”
Revitalised management team

Mr. Coombe also announced a range of management changes to help drive Generation Life forward.

Starting in the new year, the business will be led by joint CEO’s Catherine van der Veen and Lucy Foster.

Catherine and Lucy have extensive experience in financial services and will be job sharing the CEO role. They are acutely aware of the challenges ahead for the younger generation and are looking forward to helping educate parents and grandparents that a small amount invested today, together with a monthly savings plan, can solve many problems that may seem insurmountable today.

“Attracting two highly qualified, senior executives with complementary skills to embrace a job-shared leadership role is itself emblematic of our progressive intentions as a company and financial brand. We are excited about the opportunity to deliver highly practical, real-world solutions under the newly born Generation Life brand,” Mr. Coombe said.

“These are exciting developments for our business as we rebrand to Generation Life, revitalise our branding and product range and raise awareness among investors of the flexibility and investment appeal of Investment Bonds,” Mr. Coombe said.

The post Generation Life to support Australians with life stage financial solutions appeared first on AdviserVoice.