Genesys rejects exodus claims as ‘mischief-making’

Widespread industry speculation that Genesys WealthAdvisers will suffer an exodus of planners when their shares in Challenger come out of escrow on August 22 has been dismissed as “mischief-making” by Genesys chief executive Andrew Creaser.

The speculation, of which Creaser told Money Management he is “well aware”, stemmed from recent reports suggesting that up to eight big former Associated Planners (AP) practices were poised to leave.

More than 150 financial planners aligned to AP received shares in Challenger as part of a Challenger takeover of the dealer group in 2004. They were then placed in escrow for about three years to ensure their loyalty to Challenger.

Creaser said he was “well aware of various rumours from many sources” of a pending exodus from Genesys, which was established in February 2005 out of a merger of Challenger’s financial planning arm Garrisons and AP.

He said claims that eight firms are set to leave amounted to pure speculation, suggesting there is some mischief-making going on pending the escrow shares release.

He emphasised however that he was “not in a position to argue that we won’t lose any of our advisers (395 authorised representatives from 152 practices) around the country over the next few months”.

“We have an obligation to deliver to our advisers to make them very successful, and if we don’t deliver to them I expect we will have advisers leave the group over the next six, 12 or 18 months.”

Creaser said he has “travelled around the country over the past two or three weeks talking to planners, and in the main I’m getting an objective commitment to giving us the time to deliver on our new service model”.

“The message I’m getting from my firms is that they are keen to give us the six to 12 months we need to prove our new remuneration model (dealer fees and platform rebates), which came into effect on July 1, this year.”

Genesys, with overall funds under management in excess of $11 billion and $6.6 billion in proprietary platforms, had been gratified to receive the consent of 98 per cent of its core revenue drivers for the remuneration model, he said

In addition, he said Genesys planners are required to provide 90 days notice of termination — meaning “any planner intent on leaving on August 22 could have resigned anywhere after mid-May and still be around to receive their escrow shares”.

“To date, we have received only one such resignation, which was anticipated, and on which we have already reported, which also suggests we are on the right track with our new model.”