NRMA buyback opportunity for planners
Financial planners are being encouraged to offer advice to large numbers of first time shareholders involved in the share buyback scheme currently underway with the NRMA.
An NRMA spokesperson says the register for the NSW based insurer numbers at more than 1.7 million shareholders, with at least 20 per cent of these as first time shareholders.
The spokesperson says with such large numbers there will be a number of people who will be unsure whether to sell or how to proceed if they choose to do so.
The insurer has priced its shares at around $2.70, with a capital component and franking dividend component and is seeking to buy back up to 148.6 million shares.
NRMA claims the reason for the buy back is to potentially increase return on equity and earnings per share in the future while returning some of the group's surplus capital to shareholders.
NRMA says for those choosing to sell their shares, there are tax benefits that should be explored with an adviser or planner. These include making use of the fully franked dividends component to earn a tax refund.
This compares to selling on the open market which would make the whole sales price a capital component and in some cases, less favourable in terms of taxation.
According to the spokesperson, one adviser is already pointing out to clients that they can sell their shares through the buyback and gain some tax benefits and then repurchase their stock on the open market.
"These are quite complicated issues for most people who don't normally have to work through complex tax concerns," he says.
"If they need help after reading the documents they should consult a planner or adviser, and depending on their situation, receive advice about holding or selling through the buyback or on the open market."
AUTHOR
Jason Spits
Recommended for you
Insignia Financial is targeting its salaried financial advisers increase their revenue per adviser by 62.5 per cent over the next five years.
AWAG and Teaminvest Private Group have teamed up to offer a succession lending fund to help advice principals navigate succession planning and enjoy their retirement.
LGT Crestone chief executive Michael Chisholm believes the firm was chosen to acquire Commonwealth Bank’s personal advice arm due to its strong private market capability.
Advisers will now be able to tap into global markets on the platform through international signature managed accounts from global managers like T. Rowe Price and Lazard.
