The fallout from collapsed agribusiness firms has reached the dealer group level, with a number of Australia’s top dealers revealing an exposure to Timbercorp and Great Southern managed investment schemes.
InvestorDaily has learned dealer groups AMP, Professional Investment Services, ING-owned Financial Services Partners (FSP), AFS and IOOF-owned Consultum Financial Advisers are among a list of named dealers that had an exposure to the felled agribusiness firms.
News of these dealer groups and others having advised clients in agribusiness products comes just weeks after FPA chief executive Jo-Anne Bloch claimed only a small number of advisers would be involved in Timbercorp and Great Southern, with accountants holding the lion’s share.
Since making her claims, Bloch has confirmed the FPA has undertaken to research its membership over the level of involvement it had in providing advice on the company’s products.
“Compared to the overall number of people involved in the total exposure, we still don’t think it’s a large population, but what I will say is that the FPA research indicates that of the 30 per cent of Principal members who responded, 50 per cent have an exposure. While the exposure was higher than expected, on average, client portfolios had low exposure of no more than 10 per cent,” she said.
For AMP, the financial services giant is reviewing the four managed investment schemes on its approved products and services list (APSL) for its authorised representatives for 2009.
“We are working closely with our research partners and product providers as part of the review,” an AMP spokesperson said.
“Currently 1.5 per cent of AMP investment products are in the managed investment scheme agribusiness sector. Exposure to managed investment schemes in agribusiness is immaterial.
“AMP Financial Planning takes a prudent approach to its APSL, which is reflected in our advice policy for agribusiness.
“AMP requires that no more than 20 per cent of a client’s portfolio can be allocated to this asset class, and a maximum portfolio exposure of 10 per cent per agribusiness scheme. This is critical to ensuring the APSL continues to offer quality advice solutions for planners and their clients.”
While FSP did not deny an exposure to the agribusiness products, the dealer’s approach to agribusiness was scaled back in 2005/06, FSP chief executive Geoff Rimmer said.
“We took a view back in 2005/06 that whatever people felt the reasons were that agribusiness was ‘deservant’ of 10-plus per cent commissions, we decided that as a business we weren’t going to go down that path and . we had a tiered structure where the most an adviser could earn would be 5 per cent,” Rimmer said.
“And I remember over a period of time we had a lot of people telling us that it was costing us a lot of business, but we were happy for that to be the case.”
