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Comment on Advisers Want Commissions, but Divided on Coverage by Jarrad Gray

Jarrad Gray — Wed, 27 Jan 2010 02:57:48 +0000

I agree with both points 1 and 2 - there is a strong arguement that clients with all the relevant info at their disposal should be able to agree with their adviser the terms for payment of fees. Secondly that to some degree if a commission structure stays in place that standardised rates of commission is paid to remove any bias based on this alone.

Comment on Fees for Investment Advice, Commissions for Risk? by Robert Jolley

Robert Jolley — Thu, 21 Jan 2010 04:40:42 +0000

I have never had any client complain that I earn a commissiom for setting up their insurance plan.
I have however heard people complaining about the fees Financial Planners and Banks charge and in some cases they do bugger all for it.I have been proud to be a Risk Writer (Insurance salesman) for the past 30 years.Up until recently most financial planners didn’t even address risk as they only wanted FUM, risk was too much trouble and work, heaven forbid you had to handle a death claim, no money in that so clients were left without any cover until they saw a Risk Writer (Insurance Salesman)Then along comes the GFC. Finacial Planners incomes went down by say 40% so what did they do, they started to write risk and from what I’ve seen and heard, not very well.This industry is imploding we have too many associations heading in differant directions with their own agenda. My thoughts are this: Risk Insurance should still be commission based and Financial Planning on a fee for service. If you financial advisers have a conscience about receiving commission then why don’t you rebate it back to your clients and don’t forget about the trail that you have priced your business on as well.If you take the time to compare dialling down commission you will see that the premium does not come down that much compared to the commission.I further believe that the financial service industry should be more regulated by way of the advice being given. Clients also have an obligation to make sure they completely understand what they are purchasing. Seems to me they only really understand when things don’t go their way ie downturn in their super fund due to fluctuations in the market or no claim due to non disclosure.

Comment on Fees for Investment Advice, Commissions for Risk? by Fergus Hardingham

Fergus Hardingham — Wed, 20 Jan 2010 03:09:38 +0000

I agree with M Lowe RE: giving the client the option how they pay - I think clients should also be able to go to the doctor and elect to have the drug company pay for their consultation also…the doctor can elect to prescribe the drug that provides them with the best incentives…great idea.

The reality is - no other professions give clients a choice how they pay for the service - why should Financial Planners…I doubt those who suggest this give their clients the choice either.

M Lowe also mentions that the client is paying for the service regardless - correct - the client can pay for the advisor’s advice and pay an appropriate flat fee…but then pay 25% to 30% less each year in premium (thanks to the advisor rebating the commission in the form of a reduced premium) - or they can pay 25% to 30%pa more premium each year and the advisor (sales-person) gets a commission up-front and ongoing…regardless of any services being provided.

Would be simpler to get rid of commission and for advisors to charge for their advice - instead of allowing product manufacturers to determine how much advisors are paid.

Comment on Fees for Investment Advice, Commissions for Risk? by M.Lowe

M.Lowe — Wed, 20 Jan 2010 02:34:03 +0000

Let the client decide.Too many people in the industry giving their opinion just to to big note themselves.
I should be up to the client who is after all paying for thr service.

Comment on Fees for Investment Advice, Commissions for Risk? by Gerard

Gerard — Wed, 20 Jan 2010 01:44:23 +0000

I think the commissions could certainly be reduced, or alternatively if advisers discount their commission the premiums should reduce reflectively, rather than just minutely as they do now. Seems funny how when the markets were falling and adviser incomes falling, the amount of risk being written increased because advisers needed to get income to replace what they had lost. Must be something to do with the commission rates? I guess a fair bit of churning helped also. Can’t see why the insurance industry should be exempt from the fee v commissison debate, seeing as most the problems in the industry stem from the old school insurance salesmen (Cassimatis /Storm). Having said that, banning commission altogether is not a good idea, it just needs to be reduced. If an adviser feels they are not compensated enough for the work done, they can charge the client an additional fee.

Comment on Advisers Strongly in Favour of Retaining Commissions by Darren

Darren — Fri, 18 Dec 2009 08:56:27 +0000

THIS MESSAGE HAS BEEN WRITTEN BY AN INVESTOR unlike all the other messages on this site which seem to have come from advisers.
I am not comfortable paying any sort of adviser fee or commission. If this is to be paid then it should come from the super fund or insurance company.
Too many investors have been charged rather large upfromt commissions or fees for service only to see their funds whither. In the environment we have seen in the last year or two, you advisers should have been investing clients in CASH/SECURE/GUARANTEED investments. Instead many put their clients in SHARE type investments and look how much people have lost. It will take years for some of these to just get back to their inital investment amount, but you’re still getting your contribution or monthly adviser service fee.

Comment on Advisers Strongly in Favour of Retaining Commissions by Mark

Mark — Thu, 10 Dec 2009 00:25:22 +0000

I run a business that supplies insurance advice to my clients and an implementation service of that advice. I offer my services free of charge to my clients, that is they do not pay anything until they get their product [the insurance]. I take on the cost of providing the advice, documenting the advice, implementing the advice and negotiating on behalf of the client with the insurers of that advice [exclusions etc]. Then and only then at the very end of the process does the client make their first payment to the insurance company.

The insurance company then makes a payment back to me which covers my costs and hopefully allows a small profit. The cost to take a client through this process is a minimum of $2,000 [compliance being what it is] for a standard client but far greater for more difficult cases.

Please tell me would a client be comfortable to pay this $2,000 amount on top of his insurance bill? Yes the premium might come down by 30% but the cost differential is still around 100% to 200% more than they would have paid.

Would the client be comfortable to pay the $2,000 [minimum] to run themselves through the process and be declined at the end of the process ie the $2,000 is not refundable?

Would the client be comfortable to increase their insurance cover next year after a review when the additional insurance premium is $1,000 and they get an additional charge of $2,000 to implement?

The list can go on but in essence the client is actually getting a great outcome – they don’t wear the risk and they don’t pay unless they get the product. Why change the current process that actaully works best for the client.

I do think we should change the name of how we are repaid for our work - change the name from commission to remuneration. We will then be paid for our advice, time, effort, risk, service and compliance. Sounds good to me!

Comment on Advisers Strongly in Favour of Retaining Commissions by WH

WH — Wed, 09 Dec 2009 06:21:44 +0000

It is easy to adopt a fee for services if the adviser is working for an institution with established clientele.

How would expect an adviser who operates individually and has to get his own clients to work on a fee base? It is OK if he has an established clientele. What if he hasn’t a client base? Imagine, the adviser telling his prospective client that he/she will be charged even before they decides if they want to do business.

Why should an adviser recommend a superannuation fund? So are the clients the advisers’ clients or the superannuation funds’ clients? Why should the adviser work for free?

The best solution to all these garbage is to nationalise the retirement fund and have it managed by the Commonwealth Government. No more fees, no advice needed and cut-off all the red tapes, just like the Singapore government Central Provident Fund.

Sick and tired of all the greedy pigs who wants business, pay themselves million dollars salaries but don’t want to pay for the business. What a lot of bull****.

Comment on Advisers Strongly in Favour of Retaining Commissions by Patrick Maloney

Patrick Maloney — Wed, 09 Dec 2009 03:52:00 +0000

I have a business where I have purchased 4x client books since 2001,and each of these businesses is its own cost centre,and I would just like to say that the happiest clients are those that pay commissions ,exept for all this negative crap they keep reading about currently,I just send them the articles from the papers and in particular the most recent from NAB in one of our known industry rags were they rebate the trial to.66% and then replace with a 1.1% advisor service fee,I have in all my 33xyears in this business never heard such a hollow argument that will, and can only ever damage the client more than us the advisor in all my time in this industry,quite frankly if this is all the FPA and other regulators have to run on then I say go get a job,because you are just time wasters who are so far from reality quite frankly you just dont rate in the bigger picture of advisor client relationships,print if you wood like.

Comment on Advisers Strongly in Favour of Retaining Commissions by Anon

Anon — Wed, 09 Dec 2009 03:46:41 +0000

Lifewise program was launched due to underinsurance. If clients have to pay for risk advice underinsurance will become worse.