Partners drops shadow share scheme

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Partners Life is winding up its shadow share offer to advisers.

Wednesday, September 3rd 2014, 6:00AM 1 Comment

by Susan Edmunds

Since it launched, the insurer has offered advisers shadow shares based on the volume and persistency of the business they write. It is a type of “deferred commission” scheme. When it was introduced, it was estimated that advisers would see 40% to 50% of their commission come from shadow shares.

Advisers are allocated a shadow share for each $20 of issued annual premium, net of lapses, each scheme year. Persistency has to be maintained at 85% for at least three years but bonuses are payable when it exceeds 90% and 85%.

Partners said in its latest financial results that it had more than 1576 advisers signed up to the shadow share scheme. “We firmly believe we have a strong value offering to advisers, not only giving them the opportunity to offer their clients the best product in the market but also giving them the opportunity to share in our long-term success through the adviser shadow share scheme. The 2014 year saw our third allocation of shadow shares to advisers, with 1.35m shares allocated at $3.75.

But managing director Naomi Ballantyne said it had always been the company’s intention to only run the scheme for three years, as a way of rewarding the advisers who helped it get started.

“The three years was up on March 31 but we decided to extend it another six months, which is until September 30. Advisers will get another allocation of shares based on that six-month period.”

She said it was three years before each tranche of shares could be vested. The first six-month tranche of shares will be available for vesting from March 2015.
Ballantyne said some advisers had significant numbers of shadow shares while others had joined the company later and had smaller allocations. “There are some big tranches but persistency will decide whether they actually get anything.”

The scheme had worked well for Partners, she said. “But if we didn’t have something they could sell to customers it wouldn’t matter what else we did.”
Shadow shares rewarded individual advisers, rather than dealer groups, she said.

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