18 Aug True Potential Accused of Backing Out of Buyout Scheme by IFA
An IFA has accused True Potential of backtracking on a buyout scheme that the support services provider had apparently promised would have seen the IFA's business quadruple its recurring income.
True Potential, for their part, have denied that they have definitively withdrawn from the deal, however they claim that it is difficult to value the IFA's business due to a lack of clarity over the treatment of trail commission and recurring revenue from the regulator and product providers.
Additionally, the buyout was never written into a contract and it is now believed that the company are going to withdraw from the deal due to a combination of uncertainties in calculating income and worried about the RDR.
An unnamed advisor at the company commented "I haven’t got a fixed date [for retirement], but at least I had a fall back that they could buy me out on this promise. That was one of the key reasons I joined them. It leaves an extremely sour taste in the mouth."
Dan Harrison, senior partner at True Potential, added "When the scheme was launched the guidance was quite clear from the Financial Services Authority (FSA) about the status of renewal and trail commission. Since then obviously the FSA as part of the RDR has changed its stance on that and changed its rules quite dramatically in terms of change of contract, change of agency and alike,’ he said. ‘It leaves us not being able to give a definitive answer.
"The fact that it [trail commission] may or may not be switched off at any time, that’s a worry for [the] industry as a whole.
It’s not just people looking to buy or sell businesses but for any IFA wanting to stay on post RDR and protect their renewal stream, they need to think about where they are getting their money from."