Wednesday, October 24, 2012

Termination of Financial Adviser

A Financial Planner asked for my views on whether he is entitled to the future commission on policies that he had sold previously, if he resigned from the company. His contract stated:
Either party may at any time terminate the Agreement by giving not less than 30 days written notice of such intention to the other party. The exercise by the Company of its right termination as stated above shall not disentitlle the Life Planner from receiving any commission (individual policies or group insurance products), overriding commission and production commission (hereinafter referred to as "the said Benefits") due to the Life Planner up to the date of termination and the Life Planner so affected in the manner described herein before shall further be entitled to the Renewal Commission due to on premium actually paid on policies (hereinafter referred to as " the said additional Benefits") in the year following after the date of such termination PROVIDED ALWAYS that the said Benefits and/or the additional Benefits, as the case may be, shall not be payable to the Life Planner if the Agreement has been terminated by the Life Planner under this clause. Such said Benefits and/or additional Benefits shall not paid to anyone else. 
It is clear to me that the Financial Planner will lose not only the commission that accrue after the termination of the contract, but also the commission that accrue from the date of notice of termination to the date of termination, described as "the said Benefits".

It seemed to be quite unfair that the commission that accrued during the period of service, i.e. before the termination date, is also forfeited. There should be a case for the Life Planner to argue that the contract terms are unfair.

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