Do you support the Government's 'Future of Financial Advice' reforms package?
- No (53%)
- Only some elements (39%)
- Yes (8%)
- Not sure (0%)
In a week that has seen a huge shift in the Australian financial services landscape, we want to know what you think.
Our simple poll question is:
Do you support the Government’s ‘Future of Financial Advice’ reforms package?
Our thanks to the many advisers (and consumers) who have already commented on our initial story (see Government Bans Commissions…). The majority of those comments indicate adviser opposition to not being allowed to determine the nature of their remuneration in a future where they believe less consumers will be able to afford financial advice.
However, the two overriding principles that have guided the Government’s reforms are:
- Financial advice must be in the client’s best interests - distortions to remuneration, which misalign the best interests of the client and the adviser, should be minimised
- In minimising these distortions, financial advice should not be put out of reach of those who would benefit from it
Do you agree that the banning of commissions (except on risk) and the other reforms will achieve the above aims?
Click here to review the Government’s ‘Future of Financial Advice’ reforms package.
Time to have your say…
Add your comment now
11 Comments
this is all wrong. we as adviser are falling into the hands of the life companies and investment houses.they want to keep everything.and dont have to pay anyone.the adviser will dissappear.A SOA covers commission,it up to the client to choose not government.small client,and theres many of them will not pay for service. who will look after them. yes ,the banks.we know thats what the banks want.take they money and do nothing for it. Adviser should stand up.not be walked over.
For those of us that always have had our client’s bests interests at heart, what does it matter how we get paid as long as our clients fully understand the fees they are being charged. The Govt has no right to dictate how we are paid ! How does calling it a fee for service, a commission, a salary or whatever else you want to call it, make a difference to anything?
If you want to ban advisers selling products because they can earn 10% on certain products, then ban it at the PDS level. ASIC can put a cap on “entry fee/commissions at say 4% on all products and at 0.6% on assets. Would that not stop the discrimination because all products would then pay the same maximum commissions?
I feel sorry for the many australians that will no longer be able to enjoy/afford the services or support of a genuine and ethical financial planner.
Who’s next … the real estate agent who earns 3% for selling a $500K property, Harvey Norman earning 15% for selling me goods finance, the car salesman making 10%.
How about Coles, Woolies, the local greengrocer or the tradesman who can make up to 100% profit on goods/services they provide!
Whose ripping who off?
The polititians have again not understood the complexity of the issues. They have included in repition things that have already been shrouded in legislation - know your client, advise in the best interest etc.
Commisions as well as fee for service is the only way to go but the government as well as some publications think that a financial adviser is a financial planner and only looks at superannuation.
They have been wrongly influenced by industry funds and in many instances feed back to the press has been squashed.
Greed by some clients and by Storm influenced the debacle and again the good planners suffer because of it.
Banning of commissions and the other reforms will not achieve the government’s aims because they are ignoring the real problem.
The problem is not remuneration by commission; the real problem is product supplier’s ongoing control of the advice industry.
And the most conflicted remuneration structures of all are salaries paid to advisers employed by product suppliers to push their products.
Can you imagine a medical system where the only access to medical advice was from doctors employed by pharmaceutical drug companies to push drug products?
However that is the structural norm in the financial advice industry.
For consumers the only significant access to financial advice is from advisers employed or licensed by financial product suppliers. The employment opportunities for financial advisers are increasingly dependent on working for a product group to push their product.
Product control of advice ensures that advice will not be in the best interests of the consumer because it remains secondary to the placing of products by the adviser.
Product control of advice ensures that advice will remain incidental to product sales and not be universally available. No sale no advice.
For me, unfortunatley the only winners would be the banks and the industry funds.
It is a power grab so that they can dictate the terms and control everything.
I wonder what Bernie Frazer’s commission is fo appearing on television.
Given this type of regime, does it mean we can ask public servants and others what they actually make on a product? Seem to me the commercial reality is that there is a cost to market a product and this is usually rewarded commensurate with the effort required.
Why has this industry been sigled out for disclosure?
Does the grocer have to tell me how much he makes on my shopping?
It looks like the burocrats look at what sort of income can me made by an astute person and the are jealous and green with envy.
This is a load of!
This debate has lurched to the Labour ( see: communist ) partys final workers paradise. One size fits all and what ever you do dont get rich comrade.
If as i have done for many years, you engage your clinet via a contract and the contract costs ( commission, fees, asset service fees, sea shells or barter ) are spelt out in the million page SOA - then WHATS THE ISSUE ? - you will never protect the greedy or the stupid from themselves. If they want professionalism then set a cap on commission maximums at say 5% and let the market compete. One issue, is just what service can legacy cleints expect from 2012 - guess what - ZERO. Take a call and start the billing cycle, death claim - sorry, cant help you call the product provider. Want to change direct debits ? - call the product. Zero trail = Zero service.
Great job Ruddy ! - Oh yes, lets also not forget the ” super tax ” on Super dooper bank profits………
The most FARCICAL thing about this whole campaign is that I have yet to hear a client complain of trailing commissions. This is just a huge selling campaign from industry funds who are in turn underpinned by trade unions puppeteering this labour government.
I feel sorry for the Gen Y’s, who will not be able to afford the advice on setting up a Regular Savings Plan of $500 per month to start saving for their future. How will they be able to afford a initial SOA of $2,000 plus.
At least with the trail, the plan started to help pay for the initial setup costs. I thought that the whole idea was to help Australians to save for their futures. But what would I know about this after 25 years as an advisor.
As a CPA and principal of an accounting practice, we constantly come across clients, particulary salary and wage earners who need financial guidance. As accountants, tax agents and business advisers we don’t have the time or the expertise to help these people hence the need for financial planners. If the lower income earners have to start paying directly for this advice, they won’t seek it and will continue in their substandard, non performing superannuation funds. The industry funds argue that their funds out-perform the retail funds but lets see how they perform at pension time. Those that have sought the correct advice will be much better off than those who have chosen to rely on the industry funds for their retirement income. Retirement requires planning and strategy to ensure there will be enough for retirement and people need to be accountable to someone to make sure their objectives are met. If left to their own devices, they will not do it. All these reforms do is limit the advice and choice that people are able to receive and encourage an anti-competition and protectionist environment. We can only hope that the current government is not returned at the next election.
I have just read the many comments of the issue of commissions. I must say I do not agree that commissions should be banned and if a FP wishes to charge fees as opposed to commissions then he should have the right to do so. However, in order to protect our market and give is transparency commissions from providers should be capped and any fees charged should not exceed the max commission payable. The real estate industry has a max commission and an agency can charge less but not more than the max. Why can’t we have something similar. Well because the industry funds, banks and some providers don’t want us in the market place. The big losers will be our valued customers.
The FPA is comprimised as an organisation, and nothing will change until they cleanse themselves from the product manufacturer’s monetary influence. It has a conflict of interest itself, representing Dealer Groups (who have a legal duty of care to their shareholders) and Financial Advisers who have a legal & professional duty of care to their client’s. Look at recommendations number 3 & 9 page 9/14 in the information pack released by Chris Bowen on the Future of Financial Advice outlining PJC recommendations not supported by the govt. They do not support the establishment of an independent FP board of standards nor amending Corp Act 2001 to require Advisers to disclose restricted APLs in all their marketing.