Legislative risk prompts corporate super exodus
The number of financial planning firm principals placing their books of corporate superannuation business onto the market has spiked on the back of concerns about legislative risk.
Brokers have also reported a spike in the growth in enquiries from planners about the value of their superannuation guarantee books of business in the likely event the Government opts to scrap commissions on superannuation guarantee payments.
The brokers said the driving impetus is that the potential loss of trails would make them uncompetitive compared to corporate superannuation specialist planning firms in a sector already characterised by slim margins.
Centurian Market Makers consultant Wayne Marsh said the broker now had several corporate superannuation books for sale in Brisbane and Sydney, partly as a result of the legislative risk to incomes for non-corporate superannuation specialist advice firms.
Marsh said there was “some offloading of corporate superannuation books” due to some firms making a conscious decision to “move out of the corporate superannuation space [and] into a less competitive and administratively intense space” ahead of 2012.
The firm was also fielding regular questions from planners about “whether they should sell now, and what the impact of the changes will be on future values”.
Marsh said it’s “predominantly the specialist planning firms that have the capabilities in the corporate superannuation space, and have built their models around it, which are buying these books”.
Director Allan Rickerby of WA-based specialist firm WCG Corporate Super said there are a number of planners who are very concerned about their income associated with corporate superannuation and looking to sell their books of business.
However, Rickerby said his firm was “hesitant to purchase a book of corporate superannuation business primarily because they have either had bad service from planners or [because of] the legacy issue associated with the books”.
By contrast, Christopher Cachia, director of specialist firm CCA Financial Planners, said the firm was looking at acquiring non-specialist planning firms with corporate superannuation books.
“If the Cooper inquiry gets up and they say no more commission on any superannuation guarantee payments, then their books are going to be worthless, which is what is worrying a lot of planners,” Cachia said.
“[But] there are additional income streams possible from getting a corporate superannuation book, although in truth the corporate superannuation books are really a low cost leader moving forward.”
Recommended for you
Sequoia Financial Group has declined by five financial advisers in the past week, four of whom have opened up a new AFSL, according to Wealth Data.
Insignia Financial chief executive Scott Hartley has detailed whether the firm will be selecting an exclusive bidder for the second phase of due diligence as it awaits revised bids from three private equity players.
Insignia Financial has reported a statutory net loss after tax of $17 million in its first half results, although the firm has noted cost optimisation means this is an improvement from a $50 million loss last year.
With alternative funds being described as “impossible” for fund managers to target towards advisers without the support of BDMs for education, Money Management explores the evolving nature of the distribution role.
