MLC CEO Geoff Lloyd has thrown a challenge out to dealer groups around the country to follow his lead by giving advisers amnesty on their licensee fees as the cononavirus crisis situation and recent policy changes continue to buffet practices.

On Tuesday Lloyd announced MLC will waive 100 per cent of all licensee fees for three months starting on April 1, followed by three months of a 50 per cent discount on licensee fees for advisers within the group. He made the announcement during the Investment Magazine & Professional Planner Retirement Conference live event stream. Readers with digital delegate access can view content and earn CPD points from the event here.

“One thing we can do that’s in our control is to take the pressure off fees, and we encourage every dealer group out there to think about doing the same thing,” Lloyd said in conversation with Conexus Financial CEO Colin Tate during one of the opening sessions of the Retirement Conference.

Lloyd also simultaneously announced to MLC’s advice network on Tuesday morning the group would extend fixed-term advice agreement transitions by three months and also delay commencement of planned transitions of Apogee and Meritum advisers to Godfrey Pembroke in an attempt to cut advisers some slack.

“We are a large business and the planners out there servicing clients are in small businesses, dealing with difficult and different challenges every day,” Lloyd said.

“We hope that announcement take pressure off fees for the next 6 months,” he added.

Lloyd’s announcement was lauded by FPA chief executive Dante De Gori, who said MLC’s move could lead to more licensees and institutions providing support to advisers at this challenging time. De Gori made this observation during a subsequent session in which he discussed the government and industry response to the coronavirus crisis situation alongside Willis Towers Watson head of retirement solutions, Nick Callil.

Crisis times, crisis measures

MLC’s Lloyd discussed his own personal and professional experiences as the crisis has unfolded, which included working from his home in isolation in Sydney following his daughter’s minor surgery, coordinating remote working with leadership teams and staff, as well as providing insight into discussions with government during crisis meetings as part of his role as chair of the Financial Services Council.

‘Direct’, ‘open’, ‘specific’ and ‘bipartisan’ were adjectives Lloyd used to characterise the discussions he was exposed to when government engaged industry, which resulted in unprecedented stimulus pandemic measures including changes to the draw down minimum and early access to super for individuals in distress.

While it’s unclear whether advisers can expect further support from the government in the form of reprieves from new legislative requirements set to be introduced, Lloyd implored advisers to stay positive about the changes ahead.

In the session preceding Lloyd’s to open the Retirement Conference, assistant financial services minister Jane Hume was reluctant to give specific guidance on whether the government would pause implementation of legislation mapped out under the post-royal commission road map.

“We heard the legislative agenda can’t be changes, but there is a lot we can do,” Lloyd said.

“Things can change for the better. We should use this crisis to make long-term change,” he said.

7 comments on “Lloyd unveils stimulus package for MLC advisers”
  1. Avatar
    Simon Swanson

    The industry has made enormous progress separating product from advice, and elevating the value of professional advice.

    Waiving licensing fees undermines this progress, given only manufacturer-owned licensees are in a financial position to cut fees.

    Simon Swanson

  2. Avatar
    Neil Swindells

    Having decades of experience in running licensees and advice practices and product manufacturers, and caring about advice as I do, I had to enter this debate.
    I also wanted to say something, as I am Chair of Futuro, an excellent licensee that is not in need of a PR exercise to make up for past bad deeds.
    Some points I would like to make:
    1. Paul is being consistent. He wants to be in the business of owning advice practices and accounting firms, he does not want to run a licensee. But he values the role of the licensee.
    2. The banks just want to get out of being a licensee and the obligations that go with it. It was always a mismatch for banks. Banks hate risk. As a licensee you make money by managing risk effectively. So banks just selling out to avoid the risk is no surprise.
    3, For Geoff to suggest that other licensees should give up significant income, which would result in either a decline in services and financial strength or both is unreasonable. With NAB/MLC dealing with the odd billion in client compo, MLC can afford to throw a few million at being seen to be a Robin Hood.
    4. At Futuro, we will not go for such a gimmick, we will remain focused on supporting our advisers in helping their clients at this critical time.
    5. Just as they have in the past, MLC’s boss is claiming leadership on fees, but let us be frank here. How many advisers say they do not charge asset based fees but charge some type of tiered fee structure dependent upon services provided and assets? While not an asset based fee, it is an asset limited fee. The claim by Geoff is a bit holier than thou.
    6. The reason small licensees have struggled to build up capital in the past is that fees have been held down by vertically integrated banks and AMP. Their licensees were capitalized by the banks who now want to get rid of them. And these models I do understand well but the world has changed.
    7. If the capital shot at the smaller licensees who now have to pick up where the banks are bailing out was a cheap shot, the reference to Paul’s business being Italian and the link to coronavirus by Geoff, was both desperate and below the belt.
    8. My final comment is that as a licensee, when your advisers are not happy or you are not delivering the services you should know well enough the last resort is to offer all advisers a fee free period, rather than get the relationship and services right.

  3. Avatar
    Paul Barrett

    Thanks Geoff, I agree that Capital is really important. Some of the less-capitalised firms out there will be doing it tough and won’t be able to squeeze price like the verticals can. That said, some of the most capitalised licensees in Australia closed their doors last year leaving hundreds of advice businesses looking for a new licensee. Capital is clearly critical to our firms given our unique relationship with them (so are licensees!). Some of the licensees we deal with have acted quite quickly on the qualitative aspects of their offering (I am sure MLC have as well). Some examples over the past few weeks include:

    Investment in Quality Assurance IT platforms to enable pre-vet and post-vet functions to be completed in one hour thus removing a key bottleneck in the advice process (at least two licensees we deal with are investing in “Fourth Line”;

    Activation of verbal advice policies that have been sitting largely dormant. This enables simple advice to be provided on an ROA basis with appropriate file noting to distressed clients;

    Licensees are creating advice documents that enable efficient execution of the government’s stimulus initiatives that can be executed quickly;

    I know of one licensee that is assisting it’s firms with financial management tools to ensure firms can plot and project their actual and forecast P&L performance week to week enable clear decision making – the financial data is being pre-populated using IT (Xero);

    Last week one of our licensee partners produced 900 advice documents (ROAs and SOAs) via a back office solution they had invested in over the past 12 months – this solution has enabled efficiency now- in a crisis;

    AZNGA is not a licensee, however we work with many licensees. We do see the value that they offer. Like an adviser practice they struggle at times to value their services and charge appropriately. Just like advisers are doing, many of them are standing up now and delivering realtime value to their advisers and clients. It’s great to see.

    There appears to be a real coming together of licensees, advisers, and within our community of advice firms, sharing of IP, and insight designed to help advisers and clients.

    We are all in this together, it is incumbent upon all of us to ensure the ecosystem that supports advisers and clients remains strong and sustainable. We don’t want to see licensees closing putting immense pressure on advice practices, although ironically some of the most capitalised ones have done this.

    Good on you for the mental health package, I think that’s something we should all be following suit on.

    I often get asked what it would take to get the advice industry working together. I never knew the real answer was “a virus”.

  4. Avatar

    A few facts

    Planners are doing a great job – but they are not all in the same position

    :Our MLC package had only one of 3 components relating to fees

    Less than 30% of our planners receive asset based fees

    Our package was designed across the board as a whole to assist by removing some of the anxiety on practices and also provide mental health support services to all – at our cost

    We are the only business that I’m aware off that publishes all our ALPs on the internet – I challenge others to do the same

    I’d love to hear actual and published examples of the new investment in efficiency, technology and policy solutions that have been implemented by licensees in the past few weeks since this crisis has commenced

    Is it possible some licensees don’t have the capital to really respond to this situation other than in words .. maybe capital will be important again for stability and long term investment and sustainability

    I would have thought an Italian owned company would understand the global travesty if this virus

    It it not a normal situation

  5. Avatar
    Paul Barrett

    This is the latest reincarnation of Product Subsidisation of advice. Most licensees we deal with are putting in place efficiency solutions, technology, and policy to assist advisers. On the whole I think they are doing a really good job. This measure is a short-term product subsidy that is not available to most licensees. I suspect there is a large exposure to asset-based fees at the NAB.

  6. Avatar
    Christoph Schnelle

    Sorry – I saw this first on April 1st and didn’t look at the date at the top. Still, is it a common experience that things are so bad that this MLC action was necessary?

  7. Avatar
    Christoph Schnelle

    This is obviously good news for MLC advisers, but can anybody enlighten me why MLC felt this was necessary? I hope the publication date is not significant here.

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