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IOOF offers ‘Adviser Recognition Program’

At the same time as some AMP Limited advisers seek legal advice on exercising their buyer of last resort (BOLR) options, IOOF has offered advisers within its newly-acquired ANZ dealer groups what it is describing as an “Adviser Recognition Program”.

Money Management has obtained documentation signed by IOOF’s group general manger, Wealth Management, Renato Mota offering advisers within Millennium 3 the opportunity to participate in the Adviser Recognition Program which his letter claims is “designed to complement the existing Licensee offer and reward the right behaviour generated by long-term business partnerships”.

The IOOF letter comes as AMP Limited planners seeking to exercise their BOLR rights have complained about the “weaponizing” of compliance and makes clear that IOOF advisers will also be judged by their compliance record.

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The arrangement has a three-year vesting period and, importantly, the letter makes very clear that the advisers can only benefit if they are continually licensed with an IOOF group licensee, consistently achieve positive audit ratings and comply with all necessary regulatory and disclosure requirements.

The letter states that practice principals who meet the following conditions will be eligible to participate in the program:

• Their practice must generate over $250,000 annual advice revenue.

• Advisers within practices (as nominated by the Practice Principals) will be eligible for performance rights over IOOF equity.

• The value of the performance rights offered to each practice will be equivalent to 10 per cent of the practice’s annual advice revenue up to 30 September 2018, up to $3 million in revenue.

• For the purposes of calculating the performance rights, practices with annual adviser revenue that exceeds $3 million will be capped at $3 million.

• A performance right will have a dollar value, whereby the number of IOOF shares the performance right provides on vesting will be determined by the volume weighted average price (’VWAP’) of the shares over the five trading days before the date the performance right is exercised.

Importantly, the letter then states a performance right can only vest if, over the three-year vesting period, the adviser:

• is continually licensed with an IOOF group licensee;

• consistently achieves positive audit ratings; and

• complies with all necessary regulatory and disclosure requirements.




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Seems IOOF is copying all of AMP's mistakes when it comes to paying advisers. AMP shelled out fortunes in bonuses (under the guise of a 'development & marketing allowance'). All of a sudden the bonuses become "entitlements" in the minds of advisers. When will licensees and manufacturers learn to stop giving advisers $$ for distribution? We wont become a profession until its stops.

The key phrase is "reward the right behaviour". In a vertically integrated model, the "right behaviour" is selling lots of the parent company's product.

When a product company controls compliance, compliance becomes just another tool to reward/punish the adviser based on sales results. If an adviser doesn't sell enough, or recommends too much third party product, it's very easy to give a poor compliance rating based on an "i" not dotted or "t" not crossed. It's also easy for compliance to give high ratings to "big writers" by selectively ignoring some of their behaviours.

But even "big writers" can suddenly find themselves on the wrong side of compliance if they try to leave and expect a big payout (eg BOLR) or to take their clients to another product company.

Ummm ... the 1st hurdle for this ‘compliance reliant’ program is Revenue, so why is this a story?

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