Administrators were appointed yesterday to the Australian Financial Services group after key advisers abandoned the financial planning firm and reduced revenue flows.
The adviser-owned group represents 125 financial advisers around Australia and its website claims it has approximately $6 billion in funds under management.
Rachel Burdett-Baker and Luke Targett of BDO were appointed administrators of the four businesses which make up the group: AFS Group, Australian Financial Services, MDA Private and Strategy Portfolio.
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The administrators said in a statement that they have started assessing the financial position of AFS and its future viability.
“We understand that in recent times the group has actively been working with advisers with respect to a transfer to alternate licensees; however, this process was unable to be finalised due to the withdrawal of existing financial accommodation,” the administrators said.
“The effect of our appointment is to place a moratorium on the payment of unsecured creditors’ accounts in relation to trading and other debts incurred up to the date of our appointment, until creditors make a decision about the group’s future.”
The administrators are continuing to work with management, major stakeholders and regulators during the voluntary administration process.
Signs of trouble first emerged in 2012 when AFS parted company with its long-standing chief executive, Peter Daly, according to a report in Money Management.
AFS’ new chief executive, Alan Logan, commissioned a strategic review from Seaview Consulting, which he said was looking at “a range of fully-costed scenarios”.
He said once that was complete, AFS would “speak with our advisers and key stakeholders, decide on the right direction and move quickly to implement”.
Money Management reports AFS planned to explore a number of the recommendations from the strategic review, including the group being acquired by one of the major banks, but that strategy began unravelling as key adviser groups made their own way to other licensees, cutting revenue.
Over the last few weeks key financial planning practices have been moved to ANZ, BT, InFocus and other groups.