Principals of SimplyBiz and Compliance First firms, the Glasgow support services firm acquired in February, will share in up to 70 per cent of Capital Reward and Capital Reward Plus. SimplyBiz Group retains the other 30 per cent.
Product providers will fund the scheme. Chairman Ken Davy hopes to sign up most providers and claims that the scheme will not compromise independence.
Supporting providers are not yet confirmed but it is understood that Norwich Union and Legal & General are signed up.
Capital Reward will gift a minimum of 60,000 shares per firm at outset. Additional shares will be allocated based on turnover, with one share per £1 of turnover up to £300,000. A sliding scale will be applied from £300,000 to £10m.
Firms will vest a minimum of 5 per cent immediately plus 5 per cent for each calendar year they have been a member of SimplyBiz or Compliance First. Vesting will subsequently be achieved through a points’ system, allowing firms to vest 100 per cent over the next three to seven years.
To qualify, firms must vest at least 40 per cent within seven years and retain SimplyBiz or Compliance First as compliance consultants on the fifth anniversary or on vesting if later. Equal points will be awarded for similar products sold, regardless of terms, to prevent any product bias.
IFAs will also get equal shares in Capital Reward Plus when 100 per cent has been vested, based on the same sliding scale. Capital Reward Plus has been launched to service orphan clients when IFAs retire.
Davy says: “Our scale allows us to deliver efficiencies and cost savings to providers. Capital Reward, SimplyBiz and our advisers should share in the benefits of that. We will award equal points for participating providers, regardless of the terms, to avoid product bias.
“For providers not involved in the scheme, we will not pay out points. But there will be absolutely no impact on advisers’ independence. This is fully transparent. We have nothing to hide and ultimately we must ensure that clients’ best interests come first and foremost.”
Brunning Newman Houghton director David Brunning says: “We are very enthusiastic about this. It really is quite creative. The scheme will ride or fall depending on which insurers and fund managers sign up.”