Sequoia, which has recently come under fire over its decision to put Libertas into administration and potentially create a flow-on impact on advisers through the Compensation Scheme of Last Resort (CSLR), has announced it plans to further expand its number of self-employed advisers under the Interprac brand.
In its annual financial statement filed with the ASX on Tuesday, the firm declared that “the thematics for the adviser industry are attractive”.
“The rapid decline in the number of advisers since the royal commission has begun to slow in recent years with adviser numbers now steady at around 15,600. This has seen the number of recurring clients per adviser increase across the industry by between 15–20 per cent,” Sequoia said.
“Advisers have become more efficient and have embraced technology and increased the use of outsourced services such as those offered by Sequoia. Fewer advisers have been moving to self-licensing models.”
The firm said that this positive sentiment has increased its confidence regarding its own market share and future revenue.
“We are winning market share from other licensors, particularly when advisers are disappointed with the consolidation of the industry occurring,” Sequoia said.
“In 2024, we had 70 new advisers join the AFSL and whilst we did see 56 depart, most of the departures were from non-economic practices who closed or merged their businesses rather than leaving us to join a competitor.
“In our case, the retention rate of advisers of a scale we see as commercial using our services and accountants using our legal and document business has been very high. This gives us confidence around future revenue allowing the business to invest with greater confidence.”
Earlier this month, the Australian Securities and Investments Commission (ASIC) announced a CSLR payment had prompted it to cancel the AFSL of Libertas Financial Planning.
Libertas, which was acquired by Sequoia Financial Group in August 2019, went into liquidation in May 2023. In a statement at the time, Sequoia said it planned to consolidate AFS licences, with management making the decision to transfer Libertas’ operations and customers to Interprac Financial Planning and Sequoia Wealth Management.
An Australian Financial Complaints Authority determination (AFCA) had previously been made against Libertas on 24 July 2023, but this was not paid by the firm. As a result, the CSLR paid an unspecific amount of compensation to the person on 24 July 2024 and notified ASIC, which prompted the cancellation.
This is the first time that ASIC has cancelled an AFSL following a payment of compensation by the CSLR.
Speaking to ifa on Wednesday, Garry Crole, CEO of Sequoia, said the firm’s decision to close Libertas had nothing to do with the CSLR.
“The Libertas AFSL was no longer viable to run, and we wrote to all advisers in February 2023, more than 18 months ago giving them a reasonable notice period the AFSL would be closed in 2023 and if they wished to join another of our AFSL they could do so but under new terms of engagement where the provision of a service was commercial,” Crole said.
“Once all advisers had transferred to a new AFSL and there were no complaints that we believed to be still open we appointed a receiver and asked for the AFSL to be cancelled.”
Crole explained that Sequoia believed there to be no cases at AFCA to address, including the case in question.
“The case manager at that time had ruled in our favour and we had offered a settlement which the customer declined,” he said.
“The receiver has been trying to cancel the AFSL for some time, and news ASIC had cancelled the AFSL for the reasons reported came as a surprise given the receiver’s attempts to previously close the AFSL.”
At the time that the AFSL was cancelled, Financial Advice Association Australia general manager policy, advocacy and standards Phil Anderson took to his LinkedIn to say that the Libertas licence cancellation highlights the “ongoing issues with listed companies walking away from advice subsidiaries and placing them into administration”.
“Whilst at present, it is only one case that has been paid out by the CSLR, potentially there will be more. AFCA data demonstrates a history of complaints for this licensee over recent years,” Anderson said.
“Will the advice profession now be expected to pick up the cost of a bunch of these complaints? Why did Sequoia Financial Group put Libertas Financial Planning into liquidation and why did they avoid paying out on this AFCA determination? Does this suggest that we should expect a lot more CSLR payments to follow?
“This is not right and should not be allowed to be repeated.”
However, Crole insists that Sequoia did nothing wrong.
“Sequoia believes the CSLR recovery program is legislation that needs review and is driving up the cost to the consumer, adviser and AFSL and believes the minister Mr Jones needs to listen to the industry and make changes immediately as to its current status,” he said.
Hang on! Isn’t Mr Crole a non-executive Director of the AIOFP? And also a director of various Sequoia group entities.
Peter Johnston has quite rightly been making lots of noise about the disgraceful actions of E&P jettisoning Dixons & asking appropriate questions about how did E&P get away with it and how the FP community will foot the bill via the CSLR and E&P will benefit from that via the clients who came across to them, etc, etc.
Mr Crole says “Sequoia did nothing wrong”, it’s the fault of the legislators. That may be true, but whichever way he spins it, it’s the same thing. What of his moral turpitude in allowing these actions to take place?
What say you Peter about this? Isn’t it basically the same thing as E&P / Dixons? You have been very quiet. Clearly, Mr Crole has given the AIOFP a serious black eye. At the very least, Peter should show the moral fibre and backbone he has been trumpeting others should be showing & exit Mr Crole from his position within the AIOFP and sack all Sequoia entities from AIOFP. I understand it’s a tough call for Peter, but when someone has been soiling AIOFP (& the industry), so badly, time to move on it Peter. We’ll see if he has the internal fortitude. If not, then I suspect the members will be seriously considering their future with this association.
Treasury supressed ASIC vs Dixon court documents. Journalists do your thing.
“What of his moral turpitude in allowing these actions to take place?” Laws are there to be followed not judged? Our Politicians made the laws to be followed right?
Laws aren’t always well drafted, and often fail to anticipate unintended consequences. An ethical professional or company would act according to the intent of the law, rather than trying to circumvent it via loopholes.
Standard 1 of the advisers Code of Ethics addresses exactly this concept. Unfortunately there is no Code of Ethics for corporates like Sequoia, who seek to profit from professional advisers. It’s ultimately up to advisers to exercise their own professionalism, by refusing to have anything to do with Sequoia or any of its associates.
You are correct but “…often fail to anticipate unintended consequences”. Unintended consequences seems to be used a lot these days. If this is the case, then Jones and or the Liberals will have no problem getting this fixe ASAP right? Seems unlikely – which would then rule out “unintended consequences” as the cause?
Liberals originally set CSLR up, with potential consequences that were not readily apparent at the time. Whether those consequences were intended or not, Liberals are not in govt now so have no power to fix it.
Labor did not create all the CSLR problems, but they are fully aware of them, and as the party in govt have the responsibility and the power to fix them. If they fail to do so, they are deliberately choosing to continue with bad regulation that persecutes honest advisers and ultimately harms consumers. They should be booted out of govt. The same comment applies for all the other elements of the regulatory “hot mess”, which was well known by Labor when they came to office with a promise to fix it. Labor has had more than enough time to fix all the problems, and they have done sweet FA.
None of which excuses the moral turpitude of Sequoia.
Agreed – but you could say both parties have had their hand all over this legislation – and no one say these problems coming? That is a lot of people to be involved – and not even one competent person – and that seems to include the Public Service?
you wouldn’t be accusing Mr Johnston of being “influenced” by the financial contribution being received by Sequioa would you??
I also don’t remember having the entire industry signing a responsible managers declaration for Libertas…
Members will be seriously considering their future with AIOFP, and advisers associated with Sequoia will be seriously considering their future with that organisation. What adviser in their right mind wants to be associated with a mob that is willing to exploit loopholes in a faulty system, and shaft innocent advisers to generate corporate profit?
I looked up the records Libertas was placed in receivership in May 2023 , this decision to provide compensation now by CSLR appears to be less than $10,000 and was a refund of 2 years of insurance premiums for an expat who received advice over 6 years ago and AFCSA ruled on it in July 2024 and sent the claim to the receiver.
FAAA should look at the facts before they make so many derogatory statements and focus on the problems with CSLR and AFCA.
In the case of Dixsons they sold their own products and ran away from the liability as many product owners do only to try put it back on advisers that they they employed to sell . Very different circumstances and really this article refering to Libertas ownership by Sequoia going back to May 2023 is doing is allowing FAAA to attack AIOFP again because they failed to support thier advisers as AIOFP did. I am joining AIOFP and giving back my FAAA membership
A bad look this one. If Libertas does have some skeletons in the closet and this results in compensation out of the CSLR it would be ironic – Interprac advisers, amongst everyone else, would end up paying – do you call this additional licensee fees?