Ever received a transfer of servicing letter, only to contact your client to find they had unwittingly signed away servicing rights to another adviser?
Risk adviser Sam Perera, head of insurance at Perera Crowther Financial Services in Caringbah, has.
Perera originally posted his concerns about client poaching on Association of Financial Advisers’ LinkedIn page, and has had a vocal response from advisers who have experienced the same thing.
He tells Wealth Professional
he is getting “peeved off” after clients have been poached three times in four years – and each time the client was unaware they had left his firm.
If a client wants to change adviser then it is the adviser’s duty to fully explain what a transfer of service means, Perera says. “Not doing that is unethical and not professional in any way, shape or form.”
The last time it happened to Perera, a financial planner had been talking to his client about doing joint venture work in another area, and gave him paperwork to transfer service rights to sign – without explaining the implications.
The life insurance company emailed Perera to tell him the client’s policy was about to transfer off his books. When Perera checked with the client why he was leaving the firm, the client did not even realise he had signed over servicing rights to another adviser.
Perera told his client: “Hang on a minute – that’s not a great start to any business relationship, if they haven’t explained to you what you’re signing.” The client since transferred the policy back to Perera Crowther’s books.
But who are these unscrupulous advisers? Perera says “you wouldn’t know”, as insurance companies will not give out that information to the advisers whose clients are being poached.
Perera is most upset about the lack of transparency by advisers purporting to be professional.
“Informed consent is the issue. People in our profession, we should be able to expect better of each other. At very least you must have a clear conversation with the client about the transfer, with all cards on the table with remuneration – even if it’s an inbuilt commission. You should clearly explain what you can do for the client.”
While Perera does not think poaching warrants ASIC investigating, he says even if it is just the minority doing it they could risk discrediting the whole profession.
“We just need to be wary of it and keep educating clients. A client may be signing different forms in a session so it’s crucial they know what they are signing. It’s about getting the small things right so we can get the big things right.”
Advisers responding to Perera’s LinkedIn post commiserated as it had happened to them, too. Some suggested reporting the “infuriating” practice to ASIC, or even the police.
One financial company director wrote advisers are transferring servicing rights immediately when a new client asks for advice.
If a client signs the form and the outcome is explained, then I have no issue, however unfortunately a number of advisers are offering the service of finding lost super and present it as a free service. In the process they collect all the policies in force including super that is not lost.”
Another adviser wrote: “Clients may wish to change advisers for any number of reasons. If they make an informed, transparent decision, no problem. If they are signing over servicing rights unknowingly then that adviser has acted unconscionably and unethically and should be held accountable by the regulatory authorities and the advice industry.”