Fragmentation sees AFS enter administration

The exodus of financial planning practices from dealer group Australian Financial Services has proved too much, with revenue pressures requiring it to enter into voluntary administration.

Accounting and corporate advisory firm BDO confirmed late yesterday that Rachel Burdett-Baker and Luke Targett had been appointed as administrators.

In doing so it said that in recent times the group had “actively been working with advisers with respect to a transfer to alternative licensees”.

“However this process was unable to be finalised due to the withdrawal of existing financial accommodation,” the BDO announcement said.

It added that the effect of BDO’s appointment as administrator was to place a moratorium on the payment of unsecured creditors’ accounts in relation to trading and other debts incurred up to the date of the administration.

The administration process applies to all the companies falling under the dealer group’s broad corporate umbrella – AFS Group Limited, Australian Financial Services Limited, MDA Private Limited and Strategy Portfolio Limited.

The announcement of the voluntary administration came just weeks after Money Management confirmed the departure of key financial planning practices to ANZ, BT, InFocus and other groups. 

However the dealer group had indicated signs of trouble through much of 2012, including when it parted company with its long-standing chief executive Peter Daly.

By October last year the dealer group’s new chief executive, Alan Logan, had commissioned a strategic review from Seaview Consulting which he said was looking at “a range of fully-costed scenarios”.

He said that once that was complete, the dealer group would “speak with our advisers and key stakeholders, decide on the right direction and move quickly to implement”.

The dealer group began 2013 in receipt of that strategic review which put forward a number of recommendations, including the group being acquired by one of the major banking organisations – but that strategy began unravelling as key adviser groups made their own way to other licensees, therefore reducing revenue flows.