Dealer groups are divided on whether to accept payments from product providers to present at adviser events, but most believe that any conflicts inherent can be managed and licensees should have the right to decide.

Sponsorship arrangements between product providers and licensees at adviser events like personal development and workshop days are common, and for larger licensees can mean six-figure payments.

A growing section of the licensing community, however, is preferring to run their PD days free of sponsorship.

Jonathan Christie, general manager at Melbourne-based licensee Oreana, says they decided not to accept sponsorship of adviser events or product rebates “from day one”.

Last week Christie hosted a PD event for around 50 advisers in Sydney. “For one of our newer practices it was the first time he’s come to something like that without product representation,” he says.

Nathan Jacobsen, who runs Sydney-based licensee Paragem, shares Christie’s view.

“We don’t accept sponsorship and haven’t taken any payments from fund managers as far as I’m aware of,” he says. “That’s not going to change.”

Despite their shared conviction in running educational events free of conflicted payments, neither Jacobsen or Christie are looking to pass judgement on licensees that do so.

“I’ve got no issues with someone taking sponsorship,” Christie says. “I’m not taking an ethical stance here, it’s just not our approach.”

Jacobsen says he’s not looking to cast aspersions on anyone’s model, and “shares some sympathy” with licensees that accept sponsor payments. He acknowledges the commercial advantages of bringing sponsors in to present educational material while also promoting their products and services. It can work, he reckons, but it’s a “tricky line to walk”.

Conflicts in the advice ecosystem have never been more under scrutiny and their future never more uncertain. As The Fold Legal’s Simon Carrodus told Professional Planner in February, ASIC’s RG 246 provides an ‘open exemption’ that allows the licensee to decide if a benefit is affecting advice. Yet while ASIC (and the Corporations Act 2001) point towards discretion when it comes to conflicts, FASEA’s Code of Ethics (Standard 3) puts forward that advisers should not “advise, act or refer” if a conflict exists.

FASEA’s Code of Ethics however, relates to advisers and not licensees. From a regulatory standpoint, there is nothing concrete to stop licensees from continuing to accept sponsorship from providers when their advisers go to school.

No product flogging

According to Eugene Ardino, the chief executive of licensee Lifespan Financial Planning, PD event sponsorship can be beneficial if it’s handled correctly.

Ardino says his firm, which currently licenses “about 200” advisers, does accept sponsorship, most of which comes from fund managers, life insurance companies and software groups. “We don’t charge a lot,” he says. “Any sponsorship money goes towards education, most goes towards the conference itself.”

Provider payments allow the licensee to afford other speakers that bring in vital expertise, Ardino explains.

These providers are also the experts on the product they’re selling. Nobody would be better placed to answer advisers’ question on them, which is an important consideration in terms of an advisers’ responsibility to ‘know your product’.

The key to making sponsored sessions work, Ardino says, is that they must be predominantly educational rather than promotional.

“It doesn’t give them the right to talk about their product on stage,” he says. “They can have their branding and they can spend a couple of minutes talking about the fund but we don’t have people on stage flogging their products.”

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at [email protected]
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