The changing of the guard from grandfathered revenue, product commission structures and portfolio administration margins had been overdue and had favoured the economics of conflicted product distribution models, according to CountPlus chief executive, Matthew Rowe.
Flagging the likelihood of the switch from grandfathering and other arrangements showing up adversely on its company’s next results announcement to the Australian Securities Exchange (ASX), Rowe used a communication to Count Financial advisers to point to the end-run benefits of making the switch.
And, in a message to shareholders, Rowe pointed to the company having deliberately reduced adviser numbers.
He said that adviser numbers within Count had declined from 284 at 31 December, 2019, to 231 a year later but noted that the planning group expected a further 40 or more advisers to join the “revamped group” in the second half of this year.
“In terms of known roadblocks, Count Financial has entered a period of cessation of grandfathered commissions and product rebates, and the start of a wholly user-pays model,” Rowe said. “Historically, these grandfathered commissions and product rebates have represented 47% of Count Financial revenue.”
However, he said that the move represented a necessary and purposeful shift, noting that the move was likely to have “a negative financial impact in the second half”.
Comments
Is this the only time anything 'grandfathered' has been removed? Businesses borrowed to buy other businesses based on this legislated grandfathering, and some are now in dire financial difficulties. But that's all OK?
Honestly, yeah.
They made the decision to buy worthless revenue streams, much like the danish did with tulips back in the day. If those 'grandfathered' clients are actually clients, theyll pay a fee.
They will pay a fee, and a significant one at that.
Yup, and if they get value from the adviser, theyll keep paying it too.
Even the most simple SWOT analysis before purchasing a business has identified grandfathered rev was a huge risk of falling off for ages. The writing has been on the wall. Not everyone took the mickey out of it, but a whole lot of people did by just buying up books and sitting on them without service.
SD, the clients that don't want to pay have been asked (given no choice) to leave and can go to Industry Super. Industry Super will look after them with all their product related questions - and charge a fee for this advise and service even if the client does not use one piece of advice or service.
You look after them SD.
Yes, that's right. Like every other profession, in order to provide services, the business needs to be compensated accordingly to do so or no services get provided... We arent charities.
Industry Super also doesn't provide a comparable service to what we do. We are far superior, its probably time we started acting like it instead of bringing up how catered for industry super is. Good clients value what we do, focus time and energy on them.
"Historically, these grandfathered commissions and product rebates have represented 47% of Count Financial revenue."
47%!!!
This is why dealer groups fees are going up. It's also why dealer groups are transitioning to new forms of inhouse conflicted revenue based on SMAs and SMSFs. Dealer group economics simply don't stack up without conflicted product revenue.
Wasn't Count Financial sold to CBA for a fortune including multiples of trail commission, decimated and sold for a pittance? I sincerely wish for people like Rowe to be more sensitive to the issues rather than trying to gain points from its shareholders. Now that legislation as been passed, it is unnecessary to remind us how our industry has been decimated.
Tell that to all the people who now have to pay higher amounts for advice, or just can't afford to get it. :(
Now, the only grandfathered commissions allowed are those included in Industry fund fees which pay for IntraFund advice. ASIC likes those grandfathered commissions...
The idea of this switch being a strategic switch, or a voluntary 'end-run', by CountPlus - as is implied by this spin-ny statement - is quite funny.
If we remove the spin from this release, what he's really saying to shareholders is:
- Up until we were legally forced to stop, half of our revenue came from clipping every ticket we could get hands on.
- The government has stopped that gravy train, so now we have to work to justify our redundant role in the advisory landscape.
- Oh, and losing half of our revenue 'might' have a negative impact on our books.
This whole licensing grift is based on smoke and mirrors. It has to stop.
Ran the FPA and took money from product providers for years.
Sat on FASEA board and left it in a mess.
Now running a listed licenseeand claiming to take the moral high ground on rebates.
The sooner we see the back of licensee and their weak leaders the better.
His next role will be chairman of ASIC
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