AIOFP. Ahead to the past or back to the future?

The 1997 sale of Sealcorp/Asgard to St George Bank for $272 million not only greatly enriched Perth based founders Bill Healy and Graeme Morgan but started the push for Banks to enter the Wealth creation sector then buying platforms to manage clients.

This success also induced Advisers to create their own White and Private Label structures hoping to create a saleable asset and keep control of their own clients from 1998.

In 1998 a foundation function of the AIOFP was to create and manage White/Private label platform solutions for members. Personal Choice Management [PCM] was successful for members where a 50 bps margin was embedded with a wholesale administration/trustee/custodian fee to create a sub 100 bps entry fee for clients – a great outcome 25 plus years ago.

Besides for the embedded dividend for Advisers, the structure had legal agreements that clearly stated the Advisers owned the clients, the revenue, access to functionality and Advisers had to approve any communications with their clients by the Administrator.

White/Private label structures were severely affected by the FOFA Legislation where conflicted revenue was banned in 2013 but unfortunately the Adviser friendly legal agreements where also disposed of in a ‘bath water and baby’ event.

The retail platform market was then again dominated by the Institutions with Macquarie, Netwealth, CFS, and BT but of course the Adviser friendly agreements were not retained.

In 2005 AIOFP/PCM sought a new Administrator for a Private Label structure where 2 contenders competed for the role – Asgard and Netwealth. Private labels differed to White Labels where the Advisers appoint and dealt with the Trustee therefore giving Advisers control of the structure and isolating the Administrator to limited duties.

Asgard won the role when the owner of Netwealth flew to Sydney from Melbourne in his private jet to inform us that they did not want to [quote] ‘give the control of Adviser clients to Advisers’. To this day we still don’t understand why he did not just send an email, but at least he told the truth!

The conduct of Macquarie and Netwealth over the Interprac Adviser issue with Shield/First Guardian fraud, CFS with the Dover Advisers and ASIC vs BT event with 487 Adviser clients losing their Adviser has provided a clear wakeup call that Advisers are at the mercy and whim of the retail Platform operators.

This must end if Advisers want total control of their revenue, clients and practice.

It’s not what’s in the PDS or Adviser Agreements, it’s what is NOT in there is the critical issue. The AIOFP will now enter a ‘ground hog’ period where we will create a White Label structure that will give control of clients back to Advisers and establish an Adviser Panel to deal with Platform/Trustee management over communications to clients and Adviser access to all functionality.