Dover, which announced its closure on Friday, 8 June as reported by ifa, will cease to license its authorised representatives from the close of business today.
ifa understands that the majority of Dover’s 400 advisers have already made arrangements to become licensed by other groups.
But a small minority of Dover advisers – typically, but not limited to, those who have been travelling overseas in the past month – are facing the prospect of having their clients ‘orphaned’ after 6 July.
An ‘orphaned’ client is a client that is not owned by a licensee. Insurance companies will not pay commissions for orphaned clients, which has ramifications for both Dover advisers and Dover itself (which is owed licensing fees).
To get around the problem, Dover has entered into an agreement with Charter Financial Planning (AMP) practice Enva.
In an email seen by ifa, Dover said that advisers who remain authorised representatives of its dealer group on 6 July will have any clients for whom there are ongoing payment arrangements transferred to Enva.
Enva managing director and principal financial adviser Michael Baragwanath confirmed the agreement to ifa.
Mr Baragwanath said remaining Dover advisers have been presented with two options.
Under option one, which is Dover’s default option, Enva will hold the clients for a few months until the adviser finds a permanent licensee.
During the transition, Enva will service the clients on the Dover adviser’s behalf, Mr Baragwanath said.
Under option two, which is aimed at Dover advisers looking to exit the industry, Enva will enter into an arrangement to buy the clients, he said.
Mr Baragwanath stressed that Enva is not seeking to authorise any former Dover advisers.
“We will look after their clients for them short-term until they find a solution. We’re not offering to authorise advisers since we are not in a position to do so,” he said.
In its email to advisers, Dover said Enva will collect any ongoing payments and retain a fee of 30 per cent for doing so.
“If there remains outstanding debt to Dover, Enva will pass on the balance of client payments to us and it will be used to reduce the amount owed,” said the Dover email.
“If there is no outstanding debt to Dover, or once any outstanding debt has been repaid, Enva will pass on this balance to you.”
The Dover email emphasised that under the arrangement advisers would not be authorised by Enva, nor would they be able to write or implement advice.
“Enva agree to transfer your clients to another AFSL if and when you establish alternative arrangements for yourself and providing that your debt to Dover has been cleared,” said the email.
“So, if you have been negotiating with another AFSL but have not gotten that negotiation ‘across the line’ by Friday, you can continue to do pursue that negotiation.”
So in ENVA on the AMP hitlist of Adviser’s that AMP wants to exit ?
Extremely questionable behavior by a Corporate AR – it’s clear that this is just a mechanism for Dover to continue to try and collect money from client fees- and using an AMP representative as an unauthorized Debt Collector
Would be surprised if any Life Insurer or Product Manufacturer agrees to participate in this particular attempt by Dover & ENVA to enrich each other .
Time to get Terry McMaster and ASIC and AMP back into the Royal Commission
To be fair to Michaels business acumen, this is as opportunistic as it is altruistic, but on the terms described, there seems no real downside clients, so considering the alternative, well played all round by Enva. 😀
Nothing against individuals here, but from Dover to AMP – shocking to say the least. I know if i was a client, I would not want anything to do with an organisation such as AMP.
Not a good outcome, they should have been transferred to a firm without vertical integration.
I don’t think this has anything to do with AMP and to be fair to them our licensee has not once ever questioned our use of the appropriate product for our client.
Surely a change of listed adviser or dealer group requires the client’s approval. If no approval has been sought or granted then any adviser service fees should be turned off and old commission styled products should have those payments rebated to the client.
Dear Mr AMP, What so advisers can be handcufffed to non competitive and crappy un-compliant dealer groups? Clearly you have never changed licensee’s. Changing dealer groups now requires writing to clients, writing to product manufacturers, new SoA’s, new FSG’s, new fact finds, and whatever other process or policy advisers must follow with the new licensee. Surely advisers should be allowed to move to competitive AFSL’s without this impact on clients and without getting individual sign offs from a 100 individual clients. Getting individual sign offs from clients is the reason dip $#@# as to why we have orphan clients and large dealer groups getting orphan trailing commissions and grandfathered volumne bonuses for no service. oh wait you’re probably a Count executive.
Agree
AMP has a track record of receiving fees and providing no advice this seems a perfect fit
haha, but that’s no us and it’s not AMP that have offered to help
Tim Stewart – journo – lets be clear of ten fact that a lot of ex -Dover advisers have found homes with many different AFSL.s Not a large number to another group as you say in this article…. I can list at least 15 AFSL holders that took on ex-dover advisers…
This is what the advice industry is about, helping the clients.
It is clear in the above that Michael and his team have offered to service the clients in the interim. Therefore switching off the fees should not be necessary unless client directed.
It is awesome that these clients have someone to call on if they need to whilst their adviser is in limbo. Michael and his team have an excellent industry reputation and if I was in the terrible situation the Dover advisers were in I would be grateful for his offer. He will be taking on a big task and we should be thanking him and his generosity. Well done Michael!
Thanks Melinda. We actually are switching off fees – I can’t collect revenue for advice not provided. The real concern is that if a client becomes orphaned the provider may require each and every client to sign off on a transfer for the adviser to get them back. The only real revenue we expect to receive will be insurance commissions which comes with the obligation to help if they need to claim or provide advice on policy amendments.
Don’t know how you got that past AMP’s M&A? Hope they know!
Hello Terry we notified them and sort legal advice and advice from our insurer. Thankfully most of your previous AR’s have got everything sorted and it’s only a few people impacted. Funny that the first time we chat is via a public comment forum (if that’s you of course).
Careful chatting to me, guilt by association don’t you know, if that really is me!
sounds like a good deal, collect 30% of recurring revenue for not doing much. But of course the clients will be serviced in that period
It could be but I doubt it. We landed on 30% because we thought it would be just enough to cover the cost to setup codes and offer reviews to clients. Of course anyone who is heavily involved in providing a good claims experience knows – all profit goes out the window when you spend hours sitting with a client in hospital to fill out a claim form or having a cup of tea with a tearful widow.
Lots of people called Anonymous on here
Ahhh OK, lets take them the a company who parents company steals fees from dead people, offers no service for fees and lies directly to ASIC over 21 times yet get to keep their license, meanwhile ASIC destroyed Dover for a line in an SOA that had no negative impact on clients- and now you post you are just being a good bloke, you are getting paid a fee for collecting the trail are you not? Don’t you get 70% and Dover 30% or is it the other way around
Michael – can you please disclose your financial arrangements made with Terry McMaster over this arrangement? Why you? What fees, commissions, payments etc have been arranged between you, McMaster and/or Dover?
I thought the article was reasonably clear on this
Hello Sceptical – you are right to be so but the answer is simple – none.
Sorry. I’m not sure why my name didn’t appear there but that was me and to restate – no financial arrangement.
If the client weren’t in a position to be serviced (their adviser is no longer an AR, Enva would not be providing advice). wouldn’t it be fair and in the client’s best interests to turn off the fees in the meantime? The fees could be turned on again once the adviser sorts out their licensing arrangements.
Ongoing fees (fds etc) yes absolutely. We won’t be collecting any fee arranagements.
Common sense suggests that unless they actually get actively serviced, they shouldnt be paying fees.
I dont pay my dentist, accountant etc unless I actually see them and they do something for me. I certainly wouldnt be paying them if they were no longer accredited and legally werent authorised.
I totally agree. That’s how we run our practice. We do accept insurance commissions though because I don’t like the idea of stinging people thousands of dollars at their time of need.
Hello IFA and readers. Just to be clear – I know there has been some talk of a “bulk or automated” transfer of clients to us. Our offer is first and foremost to help our peers in a position of strife not to be opportunistic. I have no desire or intention to cause or add to stress or anxiety to people who are concerned about where their clients will go if they don’t have something sorted by today. If any authority to granted to us to takeover clients we will be confirming with those advisers directly before doing anything. We have offered to help because we know how devastating it would be if this had happened to us.
Not having a go Michael. You’ll need to cross all the “t”s here to keep this clean and positive. As a first step before anything, check the difference between your LI profile and the FAR as to your qualifications and memberships – just in case of Shock and Orr – as they dont appear to line up together. Double check your FSG just in case.
@michael Bargwanath – Great leadership.
Well done for helping in a difficult situation!
Will you be rebating the volume based bonuses paid back to orphan clients or keeping them?
I don’t think they can or should be transferred to be honest. If they did they would have to go to the clients or be refused.