TFSA relinquishes ownership to advisers

18 January 2008

With succession planning, growth and a stock exchange listing in mind, independent dealer group Total Financial

Solutions Australia (TFSA) has implemented a new strategy whereby the company is 100 per cent owned by its financial advisers. By swapping margin for equity, every TFSA adviser has the opportunity to become an owner, with the level of an individual’s shareholding dependent on the revenue they generate. TFSA advisers are also able to purchase additional shares outright or by giving up their commission revenue.

The dealer group’s chief executive Phillip Aris said shareholders voted unanimously in favour of the initiative and that it had been well-received by the advisers. “There is not a limit to how much an adviser can buy and it is not tightly held, so it’s not a case where we have two or three people who own most of the shares, it is quite nicely held throughout the whole group,” he said. “Our largest shareholder has around 10 per cent and we have a couple that own 5 per cent and then the next lot own 2 per cent and a whole lot own 1 per cent.”

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Apart from giving TFSA the ability to retain revenue, the margin for equity swap will also aid succession planning within practices, Aris said. “We have some advisers in the early 60s age bracket and they are looking at retiring,” he explained.“ We have encouraged a lot of these guys to bring on new people and they will be issuing some of their shares in TFSA to their own people that work under them.”Describing the approach as “quite unique”, Aris added that it also motivated young advisers to stay with the company.

“We have also encouraged a lot of young people to come into the group by allowing young, new advisers to have free adviser fees for the first year,” he said.

TFSA currently boasts $2 billion funds under advice and more than 100 advisers, making it the 33rd largest dealer group in the country by adviser numbers. It has forecast that it will be ready to list on the stock exchange by 2011.

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