Grandfathering changes already impacting acquisitions

23 July 2013

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The new grandfathering arrangements are already having an impact on both dealer group recruitment and business acquisition decisions, according to Premium Wealth Advisers chief executive Paul Harding-Davis. 

Commenting on concerns expressed by Association of Financial Advisers (AFA) chief executive, Brad Fox, that grandfathering would cease where advisers changed licensees, Harding-Davis said the reality had already bitten a number of advisers. 

He said he knew of at least one adviser who had agreed to buy a book of business but suddenly realised that many of the clients he was acquiring were invested in a major wrap and that the grandfathered trailing commissions would cease because the clients would effectively be moving to a new licensee. 

Further, Harding-Davis said because the clients were in a wrap a large element of the trails involved in the aborted transaction represented life/risk business. 

He said he believed the grandfathering changes would also act as an inhibitor to the migration of planners between licensees, and this was something dealer groups were already beginning to take into account. 

“The knowledge that moving between licensees will put grandfathered arrangements at risk will make it a very difficult decision for planners,” Harding-Davis said. 

The AFA has signaled it is in discussion with Treasury officials with respect to the grandfathering arrangements, which it regards as anti-competitive.

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