In a very strongly worded open letter to former LM chief executive Peter Drake, Martyn Terpilowski, who was formerly a Tokyo based financial adviser, describes how he sent “hundreds of emails” to Drake and to the other advisers and life offices which he feels were complicit in allowing clients to lose their money in the LM range of funds.
A particular point of consternation for the adviser, aside from his allegation that he repeatedly made ultimately un-met redemption requests on behalf of his clients from as far back as 2009, is that LM was offering commission payments of up to 9% to advisers.
The levels of commission paid to advisers has been a hotly contested point since LM’s collapse in March 2013, however in a recent post on his blog Drake confirmed upfront commissions of 9% were available to advisers. The blog was taken down within the last 24 hours.
In the post, Drake explained advisers could either elect to receive 3% trail commission per annum, or to receive 9% upfront and no commission for three years. For those investing $1m of their clients’ assets into the fund, this would result in an upfront payment of $90,000.
As IA previously revealed, there were at least 13 advisers who each invested more than AUS$5m of their clients’ assets into one fund alone – the Managed Performance Fund – which had around $400m in assets under management at its peak. At 9%, the total commission these advisers would have earned is $450,000, each.
“Going one way”
In his letter, Terpilowski said LM decided to pay advisers the 9% indemnified commission with the aim of keeping “the clients’ money tied up [in order to] ‘kick the can down the road’ as long as possible”. He argued “the fund”, was nowhere near as popular with advisers when it paid 3% commission.
He writes: “Suddenly it became flavour of the month with everyone and the life offices turned a blind eye.
“I have hundreds of emails to you [Drake]…other LM employees, the life companies and the brokers who were still pushing this, telling everyone this was going one way.”
Terpilowski also hits out at the action groups which have sprung up since the collapse, saying he is “not on the advisers’ side, or the life companies’ side and certainly not your side and the action groups are just run by your former mates who were very rude to me, when I suggested the huge issues with LM three years before implosion”.
The full letter to Peter Drake is available here.
This story was amended at 15:00 on 21/08/2014 to reflect the fact that Terpilowski is no longer an adviser and did not work in Hong Kong
