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PAA gets 'no' vote

PAA’s Holiday Home Legacy Trust could eventually be used to help fund the work of Financial Advice New Zealand - but first the association's members, including its own board, will need to change their minds about its trust deed.

Tuesday, December 5th 2017, 6:00AM 6 Comments

by Susan Edmunds

The trust is being set up to manage the $2 million left over from the sale of the PAA’s holiday houses.

President Bruce Cortesi said the trust had been worked on over the past three years. 

But at a special general meeting last week, members, including PAA board members, voted against the first version of the trust deed. Cortesi did not reveal the final vote count tally.

Cortesi said, despite that outcome, it was a “very good meeting”. It went ahead even though the deed was not set to get sign-off to enable the next stage of the process to happen.

The objective had been to either have the trust deed as it was presented signed off, or to determine what the alternative should be.

“The trust deed in its current form was not approved but that doesn’t mean to say it was wrong,” he said. “The foundation of the trust deed is solid.”

But he said it needed further work and changes to account for some of the feedback received.  The board will now enter into another 60-day consultation period, after which another SGM will be held to have that approved.

“It’s an end result I’m very pleased with, it’s progress,” he said. “It’s new territory for the PAA, to create a trust is something new.  We are all learning through the process.”

In a message to members last month, he said it was imperative the meeting happened because, if it did not, it could hold up the process of winding up the PAA and forming Financial Advice NZ.

Cortesi said the trust could be used to help fund Financial Advice NZ's work.

“We have gone with quite a broad approach in defining what the objective of the trust can be.”

In a document outlining the trust purpose, it says it can work with other organisations with similar objectives - even if that is a simple as increasing participation in professional associations by financial advisers.

PAA chief executive Rod Severn had previously denied that the money would be used to fund the establishment of Financial Advice NZ.

Some advisers have raised concerns about the inequity of how the money from the holiday houses will be used.

Adviser Geoff Wilson is one.

"I, and many others that held holiday home credits, are professionals in this field of financial advice, and have been for many years. We would like to see a strong industry in the future, and have therefore come to the realisation that the majority of the accumulated profits from the sale of the holiday homes should be re-invested back into the industry," he said.

"What I am asking for, along with other holders of holiday home credits, is some financial recognition for our contribution towards the strength of the industry. The present trust deed may be called the Holiday Homes Legacy Trust, but there is no acknowledgment in the trust deed of our sacrifice. We provided the $2m fund, and everyone seems to be lining up to use our money - the PAA and Financial Advice NZ, but we have been ignored."


Tags: Financial Advice New Zealand PAA Professional Advisers Associations Rod Severn

« Working group outlines new code's principlesMann on a mission to diversify financial advice »

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Comments from our readers

On 5 December 2017 at 10:55 am AFA Muggins said:
As a member of the PAA, I’m incredulous regarding some of Mr Cortezi’s comments, and the actions taken over the proposed trust deed.
If this has taken so many years to create, and the meeting was good, and the trust deed wasn’t approved, but wasn’t wrong. WHY WAS IT VOTED AGAINST BY SO MANY MEMBERS, INCLUDING SOME OF THE BOARD ????? And why won’t Bruce tell us the numbers in the vote?

If Mr Cortezi now thinks that some of the funds could be used to fund FANZ, could I suggest that he canvasses members of the PAA first. My discussions with members who were also part of the scheme would consider it a hot day in hell before they would consider that.
FANZ (or whatever it will be called) has no members, yet already the ex FMA Chair is creating 5 committees and what appears to be a costly empire before it has even got off the ground. This is not supposed to be a public funded government entity but a member association, which currently has no members !!!. How much is the Chair being paid, and where from? Has anyone even canvassed members of IFA/PAA to see if they are going to likely join this monolithic, expensive creation?

Back to the PAA Holiday Home Legacy Trust and this article….
“In a message to members last month, he said it was imperative the meeting happened because, if it did not, it could hold up the process of winding up the PAA and forming Financial Advice NZ.”
Wait a second – as a member of the PAA, I was unaware it was definitely going to be wound up……… have I missed something? Why is My Cortezi deciding for us that PAA is to wind up?
What are the agendas here? Why are PAA members being kept in the dark about what the board and management are up to? There seems to be some delusional disconnect between the management and the membership they represent.
On 5 December 2017 at 3:14 pm AFA Muggins said:
To clarify, I was not intending to suggest the Chair of Financial Advice was the ex Chair of the FMA - I was meaning the new Chair of Financial Advice / ex FMA
On 5 December 2017 at 8:02 pm Apex said:
This is unbelievable! The board got agreement to sell the holiday homes paid for by past members contributions by a very narrow vote indeed on the basis that they undertook that proceeds would be used to the benefit both past and present members, but now have no plans to include in distributions the past members who brought and funded those homes over forty years!

Instead, it's looking as if they are determined to use the members legacy fund to set up a new organisation which PAA members have not yet decided to join!

And did PAA members realise that their fees were used at the recent meeting to fund a lawyer to help bulldoze the board's scheme through, knowing that there would be opposition from many members?

No wonder it was not ratified!

PAA members- get along to the next meeting and make sure that firstly your money is not used to fund FANZ and secondly to make sure that the people who created and funded the holiday homes at least get some recognition in terms of how this money is to be spent!

On 6 December 2017 at 11:15 pm The futurist said:
"In a message to members last month, he said it was imperative the meeting happened because, if it did not, it could hold up the process of winding up the PAA and forming Financial Advice NZ"

We might be forgiven for thinking we are in the autocratic '60s (some might think that is the 1860s) when most folk simply accepted that anyone 'in authority' knew what they were doing and should be obeyed. But, we most certainly do not do so today in this age of transparency and instant communication.

How did the PAA Board determine it should encourage and persuade Members to wind up the PAA? Or that the proceeds from the sale of its Members' holiday homes should be available to fund Financial Advice NZ?

There is no provision in the Trust Deed presented for Member approval at the SGM for current PAA Members to be informed about Trustee decisions or its financial position. But then they are not directly reflected as being beneficiaries. Meanwhile, the Board of the Legacy Trust (i.e. trustees) can wind up the Trust at any time and distribute the remaining funds to another similar organisation.

Surely the PAA Board has not decided the PAA should be wound up just so that the holiday homes sale proceeds can be used for funding of Financial Advice NZ - as the Chairman's reported comments suggest?

It is curious why a Board would present a Trust Deed (believed to be its third iteration) for approval at a SGM and then have individual Board members vote against its approval.

The question now is whether current PAA Members want the PAA to continue independent of Financial Advice NZ; to retain the Holiday Homes Legacy Trust funds for PAA Member benefits; to reinvigorate the Board with new members who do not hold Board positions with Financial Advice NZ; and who are prepared to assist PAA Members to develop their practices and business skills to manage the rapidly changing regulatory and technological environment?

In any event, Members really need to look closely at the Trust Deed and email submissions/questions to Rod Severn now.

Can you as a PAA Member ensure the $2.1 million, approximately, of Legacy Trust funds plus current PAA asset value will remain available for the benefit of all PAA Members?

The vote whether to wind up the PAA will be as important as the vote to recommend and approve changes to the Holiday Homes Legacy Trust.

What do you think? Are you up for it?

On 8 December 2017 at 11:55 am Bruce Cortesi said:
My advice to Muggins, Apex and the Futurist, whoever you are is pick up the phone and ask your Chair or CEO for the facts to fill int the correct context from what appears to have been reported out of context in the article.

Do you really think we would be so blatant as the article suggests? Speaking directly is healthier and more transparent than hiding behind a pseudonym. Your choice.
On 8 December 2017 at 12:36 pm AFA Muggins said:
Mr Cortesi,

Then why doesn’t the PAA put out a rejoinder that specifically states which reported facts are wrong?

You need to be talking to people as a whole on these issues.

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