Yellow Brick Road entered into a sale agreement and strategic alliance with Sequoia Financial Group in relation to the head office operational and business functions comprising its wealth division YBR Wealth, according to a statement to the ASX.
The agreement is expected to complete early this year following the transfer of advisers and finalisation of other implementation aspects of the transaction.
The total purchase price will be approximately $2.5 million if all YBR Wealth advisers transfer on completion, otherwise the purchase price will reduce pro rata for any non-transferring revenue streams, YBR said.
Further, other potential adjustments may be made to the final purchase price depending upon whether:
- The YBR Super book is ultimately included in the transaction;
- Any advisers are terminated by Sequoia Group during an 18-month period post-completion; and
- The expected income of Sequoia Group from the books of any transferring advisers is reduced by any failure to comply with law prior to completion, the risks of which remains with YBR.
YBR Wealth’s share of the rights to the recurring revenue streams derived from its wealth advice and life insurance distribution businesses will be sold to InterPrac, a wholly owned subsidiary of Sequoia Group.
Under the agreement, YBR’s current advisers will be licensed under InterPrac Financial Planning following each transferring adviser entering into a new agreement with Sequoia Group and completing an onboarding process.
Advisers who transfer to Sequoia Group will continue providing advice and services to their existing clients and will retain their rights to income from their client books, YBR said.
YBR said advisers under YBR Wealth who don’t transfer to Sequoia Group will be assisted in selling their rights to income from their client book to other transferring YBR Wealth advisers or other advisers in the Sequoia Group.
In addition, YBR and Sequoia Group have reached a cross-referral agreement. Under the agreement, Sequoia Group will act as the preferred referral partner of advice and services for YBR’s mortgage broking network, and YBR will be the preferred referral partner of mortgage origination advice and services to the Sequoia Group.
“The decision to exit the management of YBR’s wealth business was driven by YBR’s recent strategic pivot away from wealth management, in which it lacked scale in an increasingly regulated environment, to focus on the mortgage market,” said YBR executive chairman Mark Bouris.
With so many good advisers looking for a new home, why would anyone pay so much money for these ones? It does not make any sense and I suspect there is much more behind the curtain here compared to what is being presented to the media. I hope ASIC is paying attention.
Another self important hack departs out of the industry, good news for all…
Um, code of ethics? You heard of it??
Newsflash for you big wigs doing the deal, suggest you read the Code of Ethics, now in force. Pay particular attention to conflict. ASIC will be interested in this news release
Mark Bouris is no dummy. He can see that there is NO FUTURE in advice anymore only higher compliance costs and risks which cost you money, not make you money.
I think you will find that if it’s at Dealer Group level ( who are not under FASEA) then it works. Just not at Adviser level.
FARSEA complexities only just really beginning.
It will be interesting to see how these “cross referral” arrangements get implemented in practice. Similarly for ANZ/IOOF and various others.
Under FASEA Code Standard 3, advisers cannot refer if they or their employer receive a benefit. But the FASEA Code only applies to licensed advisers. It doesn’t apply to corporate entities or unlicensed employees or “roboadvice”. One suspects there will be referral specific processes developed by corporates to get around the FASEA Code.
“preferred referral partner of mortgage ” – Breach of code of ethics with a preferred referral partner, and expectation of referrals.
Can’t do cross referrals, needs to be at arms length and in the clients best interests.
Cross referral arrangement?? I don’t think so post FASEA code of conduct!
The client must give free, prior and informed consent to all benefits you and your principal will receive in
connection with acting for the client, including any fees for services that may be charged. If required in the
case of an existing client, the consent should be obtained as soon as practicable after this code commences.
Except where expressly permitted by the Corporations Act 2001, you may not receive any benefits, in
connection with acting for a client, that derive from a third party other than your principal.
You must satisfy yourself that any fees and charges that the client must pay to you or your principal, and
any benefits that you or your principal receive, in connection with acting for the client are fair and
reasonable, and represent value for money for the client.