Hobson Wealth unlocks liquidity for their employees and relieves an admin overload in the process

Hobson Wealth is a leading specialist private wealth advisory group, with teams of private wealth advisers in Auckland, Tauranga, Wellington and Christchurch. The key people in the business own the business and are proudly Kiwi-owned and operated.

Hobson Wealth started an employee share scheme in 2016, following the purchase of Macquarie Private Wealth. Its leadership wanted to offer the scheme to employees to increase engagement, as well as to attract and retain talent.

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In manual pursuit of liquidity

Despite the success of the scheme for the past 5+ years there was an element lacking - liquidity. Previously, if an employee was leaving the business, and wished to/or was obligated to sell their shares they would notify the CFO, who duly emailed employees for a buyer to come forward. This first come, first served process meant people missed out and the buy/sell price was opaque.

“We didn’t have an open market of buyers as such, I had to actively participate to find interested parties. It was ad hoc, and although it never did, there was potential for friction should anyone feel the system was unfair.” - Mike Ellis, CFO, Hobson Wealth.

Additionally, the share scheme had grown in size and complexity since its inception.

“In 5 years the share scheme has become a bigger task; we have more employees with shares and we operate a shareholder loan scheme.” - Ellis.

A trading platform, plus so much more

Hobson Wealth found its solution in the Syndex periodic market. The closed trading event invites all shareholders to attend and engage in buying and selling their company shares in a fully transparent and fair setting. Price discovery is achieved through the carefully-tuned algorithm that takes all bids and offers and declares the optimum selling price.

“The Syndex product has taken out the grey area - who is buying or selling and at what price.” - Ellis.

Hobson runs monthly well-rehearsed auctions that take place over a two-day period. The automation and efficiency are not only in the running of the auction but in the infrastructure that maintains the employee's share registry.

“The trading platform offers the transparency and structure that we were lacking, but equally significant to us as the scheme managers is the employee registry.” - Ellis.

Ellis and the schemes co-manager have found the admin efficiencies save them up to 2 weeks work a year. Although they are still hands-on with the scheme the maintenance and operation is hugely minimised.

“This was the biggest surprise to us. We were looking for a tech update for the trading of shares and got so much more.” -Ellis.

Relieving the admin burden

An example of where these admin savings come from is in their interim and final dividend payments. Formerly this was an arduous process that included spreadsheet organisation, calculations, IRD website uploads and statements formulated in Word. Now the Syndex software takes care of the process with automated distribution payments and IRD uploads, document storage and employee notifications.

All employees have access to a portal, where information is published, documents are held and is the gateway into the auction itself. No longer do employees have to request an account balance, they have it at their fingertips. This has alleviated even more admin as these requests and queries were taking time to attend to.

As centrally-held and intuitive data Hobson Wealth have also removed an issue of key-man risk. A manual system tends to become the responsibility of one person despite the known risk, but the schemes co-manager now has confidence in their knowledge and operations of the scheme should they need to step in.

“For me, the registry element of the platform is more exciting than the trading. For a small finance team, the admin was a burden. The management of the scheme now looks very different to what it did previously.” - Ellis.

Hobson Wealth has around 50 employees in the share scheme. Whilst Ellis acknowledges outcomes for a bigger scheme may differ from Hobson Wealth he doesn’t see the platform as overkill.

“The pricing is good; it’s good value. It gets hard work done and as the scheme grows the admin won’t.” - Ellis.