Sovereign cans $1 million giveaway

Sovereign has backtracked on its plans to give one of its advisers $1 million next year as a reward for writing business.

The idea was that advisers who reached certain sales targets would go into a draw for major cash prizes - the more they sold, the more entries they would get in the draw. While the overall prize was $1 million - with no strings attached, there were also a number of other smaller draws.

Sovereign's new managing director Simon Swanson says the plan to give away more than $1 million to advisers as sales incentives was in its "conceptual stage".

At its roadshows last month Sovereign told advisers that instead of providing offshore trips as sales incentives, it would give away money instead.

The reason for the change is that advisers are not keen to travel offshore in the wake of the terrorist attacks on the United States. Consequently the company was going to use the money budgeted for those trips as prize money in a sales incentive programme.

"(The programme) will now not proceed to finalisation," he says.

"We regret that it has been misinterpreted prior to its finalisation and launch without the full facts being known."

He says reports on the giveaway have focussed on the amount of money and this "has seriously compromised the ability of the programme to succeed."

Swanson acknowledges that the idea has "the potential to cause anxiety amongst our customers and within our industry".

The sales promotion has been strongly criticised by some in the industry.