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Adviser anger at Honister commission sale

Ex-Honister Capital advisers have reacted with anger to news that the firm’s recurring and pipeline commissions have been sold, with advisers forced to pay up to 50 per cent of recurring annual commissions to novate clients to another firm.

Administrator Grant Thornton yesterday announced the sale of the commissions to London-based IFA MacRobins, an AR of Norfolk-based Phoenix Independent Advisers.

It says: “The administrators have sold the commissions to a specialist corporate IFA company and provided a mechanism whereby the offer group can acquire the ongoing commissions through novations.

“This can only be done where sufficient value is received in the form of an upfront payment to ensure that the overall dividend to non-advisers creditors is maintained.”

Sage Financial advisers will need to pay 20 per cent of annual recurring commissions, Honister Partners will have to pay 7 per cent, B-A Financial advisers 3 per cent and Burns Anderson 53 per cent.

Earlier this month, Standard Life and Aviva said they would accept applications for bulk transfers of clients from ex-Honister advisers without the consent of Grant Thornton.

Aviva says the announcement should not affect the transfer process. A spokeswoman says: “There is no requirement for us to make any payment of pipeline or ongoing commission following the termination of the agreement.”

Lucra Independent Financial Advisers was an appointed representative of Sage. Director Bob Lang says: “It is absolutely digusting to ask for a percentage of our commission.”

Eskdene Associates director Ian Brown says: “Even if Grant Thornton has got the legal weight behind it, it just does not seem right. It is another thing that has made the hairs on the back of my neck stand up.”

Many other ex-Honister advisers have expressed their anger on the Money Marketing website.

Aifa policy director Chris Hannant says: “It raises interesting questions about who owns trail commission, the network or the adviser?”

Facts and Figures managing director Simon Webster says: “There is no way advisers will pay to novate clients. It will simply encourage them to get transfer of agency from individual clients to avoid paying the administrator.”

Tenet is looking to take on a large number of ex-Honister advisers. Distribution and development director Keith Richards says: “If this solution had been offered from the outset, the option may have been considered a viable and faster route to re-establishing servicing rights, but we understand that a number of providers have already stopped paying trail commission, which means that the administrators have less assets to sell on.

“Additionally, a few providers are offering bulk transfer arrangements to assist affected advisers re-establish trail more quickly, with the remainder redirected through individual ‘letters of authority’, of which many are well progressed.

“It should be remembered that no-one owns the client and it is their right to decide who they wish to deal with.”

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Obviously huge sympathy for those affected, but the strength and sustainability of the network is clearly an important consideration for those thinking of joining. I guess this is why Lighthouse members are becoming nervous.

  2. This is disgraceful and as no service will be offered for the commissions being paid to MacRobins this goes agains RDR.
    It crossed my mind to ask if the Administrators advertise the sale to obtain the best price? If not they are failing in their duty to creditors.
    MacRobins must realise that there is likely to be very little left after clients have been transferred by continuing advisers, and therefore presumably paid a knockdown price.
    I also wonder what the 7% is calculated on for Honister Advisers and if this includes the non indemnity commissions.
    Many of my larger clients have been transferred already and Aviva and Standard Life plus others have novated the agencies.
    Companies such as L&G, Fidelity, CoFunds Friends Life and Aegon that have offered no support are likely to be given business only as a last resort, so they are going to have to offer very attractive terms to gain business, Something the adviser offices understand, but the execs don’t.
    we are learning who our friends are!
    Grant Thornton’s actions stink.

  3. On a transfer of control or cessation of authorisation, provider terms of business invariably provide them with the option to cease trail. Normally this is a huge negative on sale of an adviser but surely in this case it can be used to advantage (as Axa and Standard Life have already shown) and those providers who support the original adviser can be very helpful in the novation process if they so choose. I hope that the buyers didn’t pay much!

  4. Aifa policy director Chris Hannant says: “It raises interesting questions about who owns trail commission, the network or the adviser?”

    No it doesn’t! The network owns the client, the commission and the trail!

    In my view, just one of a thousand reasons it will never make sense to be in a network.

  5. Nigel Barker-Smith 1st August 2012 at 11:35 am

    Again not withstanding the obvious distress the advisors are having to battle through, everyone needs to seriously look at how and who pays them. That’s not just networks but providers, neither of which can be trusted. Third party payments are out your control and very rarely yours to call the shots.

    Whilst RDR has been controversial on many levels, the client paying direct is invaluable.

  6. Go direct are start of with Sesame and switch then to Bankhall. Stear clear of Nationals such as Positive Solutions. I control my own renewals and commission

  7. This is probably the biggest nail yet, in the coffin of networks……..

  8. If you are not already Directly Authorised you need to look at becoming so, soon! Networks have had their day and are only likely to reduce in numbers as time passes…

  9. the act is pure theft nothing else, the reciever is putting his hand into the pockets of advisors who own the commission, talk about taking the shirt of someones back? meanwhile the bankers recieve tax payers money to prop up their well established practises of depriving consumers of their money

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