Yellow Brick Road is selling its wealth business for A$2.5m to the Sequoia Group as the company decided to focus on mortgages.
The deal will see Sequoia's subsidiary InterPrac Financial Planning purchase YBR's share of the rights to the recurring revenue streams from its wealth advice and life insurance distribution businesses.
YBR's 56 current wealth advisers will become advisers of InterPrac which holds an Australian Financial Services Licences within the Sequoia Group. Each adviser will have to enter a new agreement with Sequoia and complete an onboarding process.
The decision to exit the management of YBR’s wealth business was driven by YBR’s recent strategic pivot away from wealth management, in which it lacked scale"
The sale, which is is expected to wrap up in early 2020, also includes a cross-referral agreement for Sequoia to act as the preferred partner of wealth advice for Yellow Brick Road, and for Yellow Brick Road to provide mortgage advice to Sequoia.
"The decision to exit the management of YBR's wealth business was driven by YBR's recent strategic pivot away from wealth management, in which it lacked scale in an increasingly regulated environment, to focus on the mortgage market," executive chairman Mark Bouris said.
"The selection of Sequoia was made after a long marketing, evaluation and negotiating process," Bouris added.
The new deal comes after Yellow Brick Road slipped to a A$37.29m full-year loss on A$33.95m worth of impairments against its wealth and lending unit.