Changing of the guard for former Storm clients
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Financial Index Australia (FIA) may have been selected yesterday as the purchaser of the Storm Financial Planning client book from administrator KordaMentha, but the dealer group is not resting on its laurels.
Financial Index chief executive Spiro Paule said FIA would be using its selection to support an offer of its services to those former Storm clients outside of the KordaMentha client book.
“Our presumption is that there were 14,000 clients at the height of Storm, who probably moved on to other advisers or simply dropped out of the system, and we believe we can also restore some value to these people.”
FIA’s purchase of the KordaMentha client book effectively gives it the income rights to the 4,000 Storm clients who are still paying customers of the Storm business, Paule said.
“What we have effectively purchased is the income rights to these 4,000 people who are somehow still paying customers of the Storm business," he said.
“In other words, we have bought that fee these 4,000 clients were paying to the liquidator effectively as damaged Storm goods, and for which the clients got nothing in return.
“These clients were either still paying a fee to Storm or have a product that they purchased through Storm, or through a predecessor to Storm, and that product is generating a fee to Storm.”
Paule said on taking over that cash flow, FIA will “offer ourselves up for services to the 4,000 clients and make sure they start to get some value for what they are paying”.
A letter will be immediately sent to each of these clients specifying how FIA can assist them in the immediate term, in the medium term and in the long term.
He emphasised however that FIA is “not in the trade of human cargo — we can’t force anyone (in the client book) to use our services".
The 4,000 clients are concentrated in the Northern Queensland towns of Townsville and Mackay, with some in Brisbane and a few in Sydney, according to Paule.
A principal member of the Financial Planning Association, FIA has 10 locations around Australia, with another “three or more [practices] opening shortly”, he said.
“We currently have 26 advisers, and there are another nine who have signed on specifically to help out so we can spread our coverage to these additional clients."
He described FIA a “general practitioner”, with its target market as “middle Australia, everyday people”.
“All our advisers are salaried advisers and we don’t charge commission for any product sales, and no FIA adviser is ever asked to chase a sales target," Paule said.
“In this sense we are distinctly different to the model Storm employed. In addition, we do not do anything by way of gearing up or margin lending.”
He said that while the FIA remuneration model is fee-for-service, the problem with the acquisition is there a lot of legacy business that is still running on trail-based income.
“Until you can renegotiate with the clients one-on-one you can’t change anything, but overtime we will put forward a fee-for-service proposition to them.”
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