Weighing the risks of bypassing lawyers
Experienced planners who are buying or selling a relatively small book of clients may decide to use a legal template for the transfer agreement and accept the risks, says The Fold's Claire Wivell Plater.
"Sometimes the legal fees can seem disproportionate, and to be honest a lot of planners don't want to pay them," she said.
Wivell Plater was quick to point out that there are risks involved, since the planners involved may not be qualified or sufficiently skilled to identify problems.
"At the very most the agreement will allow you to understand what the issues are … then, if there's something that is outstanding or is not covered by the agreement, you'd want to get some legal advice about it," she said.
But Forte Asset Solutions director Stephen Prendeville, who brokers practice sales, said every one of his transactions requires legal advice - "irrespective of how large or small they are".
He acknowledged that a large part of agreements could be templated, because they tend to be standardised.
"However, I do find that every term sheet that I do has to be individually tailored. As every individual and every business is different, so is every one of my term sheets," Prendeville said.
Radar Results principal John Birt said he brokers around 30 transactions a year, and for those agreements only about 5 to 10 per cent of advisers decide to forgo legal advice and "do it themselves".
It used to be the case that some advisers would take a contract or a transfer of sale agreement from a previous sale and attempt to reuse it, Birt said.
"[But] if the transaction's a $200,000 purchase price or higher it's like buying a house or a unit - you really should have a lawyer," he said.
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