Is InterPrac sale in clients’ best interests?
The client implications of Sequoia Financials’ sale of IntrerPrac to Conquest Investment Partners have been brought into question by panels at Financial Newswire’s Advice Wealth and Super Conference, in Sydney.
Infocus Wealth Management founder and managing director, Darren Steinhardt expressed concern that the sale may have served to diminish the rights of InterPrac clients in the wake of the collapse of the Shield and First Guardian funds.
Steinhardt was part of a panel debating the evolution of the financial profession, particularly the role of major licensees and those who are self-licensed.
At the same time a panel of platform and research executives noted that the Shield and First Guardian fallout had hit hard because the gatekeepers, including platforms, had failed at almost every level.
On both the licensee and platforms panels, participants confirmed that the promoters of the Shield and First Guardian offerings had sought inclusion on other platforms and had been rejected.
Fiducian executive chairman, Indy Singh confirmed to the conference that the two funds had sought access to the Fiducian platform offering while, similarly, AMP North’s Director of Strategy and Transformation, Mike North confirmed that in 2022 AMP was approached but didn’t make the grade. Notwithstanding this, he said AMP had reviewed its governance in the context of the fund collapses and whether the governance regime had worked appropriately.
HUB 24 Director of Strategic Development, Jason Entwistle said that from his platform’s point of view both funds had applied to join the platform and both had been rejected.
“We think the process worked and we’re not looking at massively ramping up the cost of that,” Entwistle said.
He said that while the regulations do not spell out the role of a gatekeeper, it was incumbent on platforms and others to accept that role.
Entwistle noted that victims had sought out an alternative to their existing superannuation funds after hearing media reports around death benefits or other matters.
“They went looking via Tik TOk, Google or Chat GPT, who knows?” he said. And they were referred to bad apples.
“The gates failed at every level. Every gate failed. We’re all gatekeepers. If we want to stop this happening again, we all have an obligation to man the gate and dob people in if we see bad behaviour,” Entwistle said.
NESS Super chief executive, Paul Cahill also questioned the role of the gatekeepers, asking about the failures of the auditors, custodians and administrators.
“It has blown up for the whole industry. It is a system-wide issues and should not have happened,” he said.
The reason companies have businesses within separate entities is to manager liability risk. There is no obligation for parent entities to bail out or cover the liabilities of their subsidiaries in the event of collapse, default, etc. So, regardless of the company’s owner, liability doesn’t extend to its owners; thus, the term “Proprietary Limited,” or, in the case of a public company, “Limited” (other than directors’ liability in some circumstances). So while I agree it doesn’t feel good, I am not sure it changes much; the assets within Interprac are all that anyone can make claims against.