What's happened to the $2mill from PAA's holiday homes?

The Professional Advisers Association (PAA) controversially sold its holiday homes in 2016 netting around $2 million; but what's happened to that money? Susan Edmunds investigates.

Thursday, January 16th 2020, 6:21AM

The PAA froze its holiday home scheme in 2015 and subsequently sold the seven properties for $2.9 million. The association then established the PAA Legacy Trust which has as one of its stated purposes the goals of promoting and educating financial advisers.

The net proceeds from the sale process was about $2 million.

While the meeting to establish the trust took place in the middle of 2018, the initial $2 million was only transferred into the trust in the second half of last year.

Trust spokesman Trevor Slater said the association had to go through its wind-up process before all the money could be transferred, which was “almost completed”.

“Setting up the accounts took quite a while due to banking requirements. These funds are now in a bank account earning standard interest,” he said.

He said it had taken longer than expected for the trust to receive the money from PAA because of the administrative process but it had ended up with slightly more than had initially been expected.

The trustees were all "working people", he said, so it was not always easy to convene a meeting.

“Late last year the Legacy Trust issued an RFP for an investment and management plan for the funds. We received three proposals which were considered by the trustees just before Christmas. There were some further questions that needed to be answered and we are currently waiting for these to be responded to."

It had narrowed it down to two options, he said, but the trust was seeking more information on tax and fees in particular.

That should be decided upon by the end of this week, he said.

“The Legacy Trust is also still waiting for the final funds from the PAA that cannot be paid until the PAA taxation obligations are completed. How the funds are to be used is set out in the trust deed of the PAA Legacy Trust.”

He said the trust had already received a couple of proposals for funding. It should be able to make grants "fairly quickly", he said, and would not need to wait 12 months for the first payment of investment returns.

That should happen by the end of February, he said.

The trust would look for proposals that promoted financial advice in New Zealand and could be for individuals or organisations, one-off or on an ongoing basis.

But adviser Geoff Wilson said not enough information was being given to advisers – and because the PAA had been wound up there were no association members to report to.

He said the trust was intended to promote the industry but it did not seem to be clear how it would do that.

But he said, given the changes the industry was working through, it should not be hard for the trust board to find work to fund.

“We’re going through a period of drastic change in the industry with very little input from advisers. I would have thought if you wanted to do some research and someone could spend time doing that they could help out the industry enormously. But they’re sitting on their hands.”

Earlier stories

PAA attempts holiday homes vote 2.0

$1.9 mill start for PAA Legacy Trust

PAA axes holiday homes scheme

PAA votes to abolish holiday homes scheme

Tags: PAA PAA Holiday Homes Trevor Slater

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