AIOFP. Practice valuation, control of your clients and your future

The recent notice to NETWEALTH supporting Advisers is a clear wake – up call to what the future holds for the valuation of your practice, control of your clients and your future in the Profession – see down below.

Full credit must go to the Heine Family for their brutal honesty, they have not ‘sugar coated’ the circumstances – once your clients go into the NETWEALTH structure you have zero rights and they own and control your clients.

This outcome will affect the future valuation of your practice if your clients are not under your direct control which is precisely why they sort your advice in the first place. Why would a prospective purchaser of your business pay top dollar if you do not control/own your clients and they are at the total mercy of ruthless Managers?

Macquarie/Netwealth/Hub 24 over Interprac, CFS with Dover Advisers, AMP against their own, Zurich recently and the list goes on – this is why SMSF and Managed Accounts are gaining in popularity with Advisers!

It also appears Netwealth have now assumed the role of your practice quasi Regulator and compliance manager with demanding access to your practice so they can feel comfortable dealing with you whilst taking control of YOUR clients and their cash!

How magnanimous of them…..

Many retail platform operators have transformed from being a Profession service provider into an institutionalised group of megalomaniacs.

It seems the Institutions and other stakeholders are bitter about finally being held to account by ASIC for their role in the First Guardian/Shield product failure fiasco.

Over the decades, they have let the Advisers get unfairly crucified over product failure whilst they all ran for cover pointing the finger. But now after being caught, they are focussed on punishing Advisers with imposing these draconian uncalled for conditions trying to justify they are better suited to look after YOUR clients than you are.

We first experienced the Heine business culture in 2006 when Asgard and Netwealth had tendered for the PCM Private/White Label and Michael Heine flew in his private Jet from Melbourne to address the AIOFP/PCM Board about their decision. His address lasted literally 10 seconds with [quote] ‘Its not in our business model to give Advisers control of their clients’ , wished us well and apparently flew straight back to Melbourne.

A phone call would have been sufficient, Asgard was awarded the role and the following conditions were apparently not liked by the retail market at the time –

• the legal rights of Advisers in the Agreement.
• the PCM/AIOFP committee dealing with the Manager on client management
• Advisers having the crucial relationship with the Trustee to decide communications/actions with clients and shaping the APL.
• Advisers having acknowledged and legal of their own clients from the Managers perspective.

All Private/White Labels were shut down after the Royal Commission recommended the banning of Grandfathered Revenue in 2018, but when the Retail Platforms took back control in circa 2019, the legal rights of Advisers and control of the client clauses were naturally eliminated.

This is precisely why the response from members about the AIOFP re – establishing a White Label with all the original agreements and controls in place was so popular back in February.

You may recall we used IT/Platform expert Arthur Naoumidis to interview and select a Manager for the Foundation Wrap service. Arthur spoke or directly dealt with most Managers and there are only 2 that do not have the above intentions, make no mistake about that.

It appears the ‘old trick’ of one making the first move to soften up the market then the rest will follow suit is underway….like what Banks do with interest rates.

Pleased to say the AIOFP board is meeting this Wednesday to make a decision on Arthur’s recommendations, we will advise you immediately of the results.

This is a great chance to fight back and hit them where it hurts most – not giving them control of your clients, your clients cash and your practice.