Pay advisers daily

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The Federal Court of Australia’s decision not to pay AFS advisers money due to them has caused outrage in the advice community.

Administrators were appointed to AFS in April. Rachel Burdett-Baker and Luke Targett from BDO were appointed to halt the payment of unsecured creditors’ accounts while they assessed the financial position of the company.

The Court this month declared that the amounts received in the AFS Group Brokerage Account, in respect of commission and fees arising from the advice or other activity of AFS authorised representatives, are not held on trust for the authorised representatives or former authorised representatives.

Synchron director John Prosser says this is a matter of grave concern, and it is not the first time this has happened.

“A very similar thing occurred when another licensee, Silvalake Financial Services Group, was placed into liquidation almost 10 years ago.”

He says that to lessen the impact of decisions like these, money owed to advisers in the form of client fees and commissions should be paid to them as soon as it is earned.

“Synchron believes that money earned by an adviser belongs to the adviser and should therefore be paid without delay,” says Prossor. “For this reason, Synchron has always paid advisers daily. We don’t hold advisers’ money in a trust account or any other account, for any longer than we can help it.”

Daily payment is subject to the licensee having received a statement from the product institution that identifies the advisers to whom the fees and commissions belong.

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  • Greg on 16/08/2013 2:19:29 PM

    I have my own AFSL - I do not see it as more admin when you comapre it with the hassle of having to change licensee with the prospect of no income for a month or two!!

  • Rob on 16/08/2013 10:00:56 AM

    Cannot agree Paul

    A big institution will just do you over if ever you try to leave - Why? because they can afford to. Better to be in control of your own destiny by having your own licence. Might not get a cheap conference anymore but way more enjoyable

  • Paul on 16/08/2013 9:47:43 AM

    Paying income daily instead of weekly or fortnightly will reduce any outstanding income owed to an adviser but it will not solve the problem. It will just reduce the impact slightly over a weekly payment for example.

    All further income received by the licensee will still be retained until client servicing trails are transferred manually by the adviser to the advisers new licensee.

    The solution is not to be in a smaller licensee without significant financial backing.

    Maybe this is another reason for all advisers to be part of an institutional owner.

    It's not what a lot of advisers will want to hear but these are the issues with some licensees that do not have significant financial backing and therefore need to shut the business down in these situations.

  • Rob on 16/08/2013 9:14:58 AM

    Solution is to get your own licence

  • Pat on 16/08/2013 10:57:18 AM

    Paul, we are a 'self-licensee'. Our PI are, anecdotally, lower than other larger dealer groups because we take fewer risks with our APL and other business practices. We outsource some of our admin to a 3rd party at discounted rates.

    Yes, there is increased admin and perhaps more stress. But the these are a cost more than offset by greater control and financial rewards.

  • Paul on 16/08/2013 10:27:24 AM

    I agree Rob.

    Having your own licence is better but also comes with increased admin, increasing PI premiums, stress and no support.

    I would prefer the more personal touch of a smaller licensee but the events happening as per this article would worry me as I have an established business and to lose a month or two of income whilst transitioning to a new licensee is a big concern.

    Maybe having your own licence as you have is the way to go?

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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