Genesys in member firm lockdown

Genesys Wealth Advisers is working overtime to stem the flow of outgoing member firms by creating a new loyalty scheme aimed at locking in firms for up to five years.

The AXA-owned dealer group has lost a substantial number of member firms to rival Fortnum Financial Advisers in recent months, a dealer group run by ex-Associated Planners chief Ray Miles.

It is understood Genesys was at risk of losing a number of other firms this month following the payment of benefits accrued in previous years, with benefits conditional upon members firms remaining fully engaged until payment.

Genesys yesterday issued a letter to principals outlining a new loyalty scheme that locks in some existing discretionary incentives and introduces new payments.

The loyalty scheme was signed off by Genesys chief executive John Saint.

Under the ‘enhanced loyalty scheme’, member firms can defer previously negotiated loyalty payments that were due to be paid in July 2010 in return for interest payments of 10 per cent per annum for up to five years on 70 per cent of the entitlement amount.

Member firms have also been given access to another program that would see their incentive calculated from performance at 30 June 2010 (normally payable in July 2011) increase by up to 150 per cent of the amount payable over a period up to five years.

Firms that remain locked in until 2012 will receive 107 per cent of the amount, with the numbers ratcheting up each year, to 150 per cent in 2015.

Genesys has also made changes to a previously negotiated but discretionary incentive — the temporary additional margin scheme — introduced in 2008 following AXA’s acquisition of the group. Saint said some member firms had been critical of the discretionary nature of this payment, due in July 2011. In response, Genesys is offering what it described as “contractual certainty” regarding the payments — with the proviso that member firms don’t resign on or before 30 June 2011.

Genesys is trying to shore up the deals with member firms by 19 July.

In the offer letter Saint said over the past six months the group had been “focused on developing new and innovative ways to improve our level of engagement with members firms”, pointing to a new remuneration model taking effect from today as another example.

The group is holding a briefing session for principals in Sydney on 12 July, at which Saint will outline more elements regarding the loyalty scheme, including the details of "an additional opportunity" for member firms.