Planners move as grandfathering clears up

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Movement between firms is beginning to unfurl again as advisers feel braver about grandfathering restrictions, after the government announced FOFA amendments last month.  

Merger and acquisitions firm Radar Results had eight practices approach them on Monday morning, CEO John Birt told Wealth Professional.

“We’ve never had eight approach us in one morning before… Obviously people are thinking ‘that’s great, grandfathering’s not an issue any more’.”

Uncertainty over whether grandfathered commissions could move with an adviser changing licensee began last July, when Labor-introduced FOFA regulations came in.

“Since July there’s been uncertainty on the regulations, many advisery firms that were looking at selling or advisers who were looking at moving licensees were suddenly put on hold. They sat there doing nothing. Radar Results was affected – our M & A business was certainly affected to some degree,” Birt said.

The concern was such that major dealer groups such as Synchron put a halt on recruitment while waiting for the regulation to be clarified.

“I can’t see this standing the test of time,” said Synchron director Don Trapnell in July. “But in the meantime… I have six applications to be an authorised representative of Synchron, on hold.

“We have a duty of care. We’ve had to say to current applications, ‘if you’ve resigned from your current licensee, withdraw your resignation for the time being’.”

Birt said while there is “not much that needs to be changed” with the regulation, the government needs to give clarity and reassurance to the industry.

Assistant Treasurer Arthur Sinodinos announced FOFA amendments just before Christmas and the drafting of new grandfathering regulations is to be finished in the next week, predicted Birt. It will then go to the governor general for approval before becoming a new regulation, scheduled for February.

But despite Sinodinos’ announcement, many within the industry remain unclear as to what the grandfathering changes will entail.

“I’m as confused as many others. The minister [Sinodinos] made some comments but I’m not exactly sure what is going to happen at this stage,” said Max Franchitto, a business analyst who gives planners best practice advice.

“I know what I’d like to see – the moment an adviser changes dealer groups, grandfathering should not exist. A new contract, a new relationship and a client should have the option of opting in or out.
“But right now I’m getting mixed messages. There’s got to be a use-by date for grandfathering. The government now needs to make a very clear cut decision.”


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  • Alan on 15/01/2014 10:44:01 AM

    Well said Merv, this Mr. Franchitto appears to know what is best for we advisers but I don't think he has ever had adviser experience. I took issue with him just yesterday regarding his plea for everyone to stop criticising ASIC, as if they are above criticism. I don't know what his agenda is, but to suggest that if we transfer from one licensee to another we should lose a proportion of our income is sheer nonsense. Let's wait and see whether he can back up his view with a good sensible argument.

  • Merv Gay on 15/01/2014 10:25:56 AM

    Max Franchitto makes the statement that "the moment an adviser changes dealer groups, grandfathering should not exist. A new contract, a new relationship and a client should have the option of opting in or out." I do not understand this view and rationale. What do you actually mean Max? When an adviser changes dealer groups, it really has nothing to do with the client. The relationship between adviser and client doesn't change. I don't think the client would care one zippitty doo da which dealer group we belong to as long as we look after them (the clients) properly. The only reasons I think an adviser changes dealer groups is (a) to receive better training and have access to better planning advice, (b) to receive higher remuneration such as a share of volume bonuses, (c) to pay a lower level of their income to the dealer, (d) and also I think for the adviser to have more hands on contact with the dealership to feel part of a team, and not merely a head at a PD day a couple of times a year. Now Max Let's hear why you support your view! Merv Gay

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