Should tax deductibility of the cost of financial advice only apply for advice that is provided under fee-for-service models?
- No (52%)
- Yes (44%)
- Not Sure (4%)
Our latest riskinfo poll addresses another of the emerging topics out of the Ripoll Inquiry, relating to calls for full tax deductibility of the cost of financial advice.
The vast majority of advisers would vote ‘Yes’ if asked whether the cost of their advice should be made tax deductible, but what is your opinion about whether the proposed tax deductibility should apply to all advice fees or only to advice provided on a fee-for-service basis?
So, our poll question, in the event that the full cost of financial advice may be made tax deductible in future, is…
Should tax deductibility of the cost of financial advice only apply for advice that is provided under fee-for-service models?
For comments on this topic, see our related story: Calls for Full Tax Deduction on Cost of Financial Advice - Fee for Service Only?
Another question is to what extent would any future arrangements that see financial advice fees made tax deductible, make it easier for advisers to transition from commission-based to fee-for-service remuneration, especially if the tax deduction may only apply to fee-based advice?
Our poll is one place where you can voice your opinion, by posting your vote and adding any comments.
A number of advisers and dealer groups have also made their own submissions to the Ripoll Inquiry on a broad range of topics, together with institutions, government organisations, representative associations and clients of failed financial services providers. Their submissions can be accessed here: Submissions to the Inquiry into Financial Products and Services in Australia.
But on the question of tax deductibility of financial advice for all advice models, or only fee-for-service…
Add your comment now
2 Comments
After reading your understanding of this poll, there is some slight confusion. with 47% wanting all fees to be deductible, i believe this is based on a possible acceptance that it is going to happen that upfronts and ongoings commissions are not payable from July 1 2010. As clearly seen advisors do want choice but may not get it. many cleints seem quite happy to pay commissions even when offerred the choice but a deduction would be ideal for them and i do not consider it would be common for advisors to increasse there fees?? but some may sell this on the net cost and take advantage. capping the hourly fee is not the answer as they could just justify more hours worked.Unfortunately i do not see this a change to fee only as the answer of meeting the publics needs and we will see many advisors not coping with this and thus less advisors to the public could result. there are full disclosure regs in place already for commissions. the next concern we have is advisors then advertising negatively posing the question to the public that are their current investments paying fees to an advisor?? and so further churning will result with a weak basis for a RBA. for those with lower fund balances this could quite obviously mean higher costs for them and good sales skills will prevent the client from fully understanding this.
The problem with “Fee for Service” is that it cuts out small investors, who are very happy to pay by instalments (mis-named commissions).
It is the word “commissions” which they tend to object to and (like Politicians, ASIC, the Financial Planning Association, accountants) they do not understand. This is an affordable way for small investors to obtain advice, which they would not be willing to obtain through a large uffront fee. Young people with children just cannot afford “Fee for Service”. Yet they are arguably the ones who need it the most. My business, unlike banks etc serves the small investors. A “Fee for Service” model would kill that business off. This would play into the hands of the banks. Who is kidding who?