AXA considers the price to keep firms

Greg Kirk

Genesys Wealth Advisers’ financial planning firms are to receive an incentive — probably cash — from purchaser AXA Asia Pacific to remain within the dealer group after the sale goes through next month.

Challenger Financial Planning chief executive Greg Kirk told Money Management that “some form of incentive program will be issued to our 150 member firms”, which comprise 370 authorised representatives.

Kirk said he could “not give any substance to the structure of the program until it has been communicated to our member firms after the completion of the sale”.

“However, neither myself, the Genesys executive or AXA as the future owner has contemplated issuing shares in AXA to our member firms through the incentive program.

“We’re not going to be doing it in stock, in shares, as that does complicate, for a number of reasons, the transaction from the point of view of the stock itself.”

The program structure will be communicated to member firms “most likely somewhere between the (current sale) completion date of June 30/July 1 and the Genesys national conference at the end of July”, he said.

“Until then, all I can say is that my prospective AXA directors of the Genesys board and I will be putting a proposal forward to the AXA group for final ratification through their internal processes.”

He added that it “was contemplated throughout the deliberations leading up to the announcement of the sale earlier this month that there would be incentives as part of a commitment to the new group”.

“This is necessary as a group goes through changes that sort of destabilise member firms and staff and, accordingly, they look to some line of certainty around the commitment from the new parent.”

Kirk may well have been reflecting on his own incentive experience within Genesys before the announcement on June 4 of its sale (as well as its proprietary platform Synergy) to AXA for $150 million.

In mid-2004 Challenger issued $100 million in shares to buy Associated Planners (AP) (which it later renamed Genesys), with each AP shareholder receiving 5.7 Challenger shares for each AP share they held.

However, 50 per cent of these shares were subject to escrow conditions, released in tranches over a three-year period, immediately after which a number of financial planning firms left Genesys.

This time Kirk, who together with Genesys director Andrew Creaser will continue to run Genesys after the sale, is confident of “being able to resolve any material or immaterial concerns” among member firms over the sale.

“We have communicated to our member firms the reasons for the acquisition and we will be reiterating that it is a change of ownership, not a change in strategic direction.

“I am confident that if our people are happy (with the deal) on June 29 then there is no necessity for them to feel on July 1 that things have changed for the worst in the way we are going to do business.”