Poll Results – Advisers Send Clear Message on Remuneration

In our latest riskinfo poll, 77% of advisers have said they disagree with transition to a non-commission, fee for service remuneration model.

This debate, which has existed for many years, has been fuelled by the release on 1 May of the FPA’s Consultation Paper on Financial Planner Remuneration.

The poll question advisers have been addressing is whether they agree with transition to non commission-based adviser remuneration (incl hourly rate, service-based and asset-based fees), as suggested by the FPA in its consultation paper.

At time of publishing, 77% of advisers voted ‘No’ to this question, while only 18% of advisers were in favour, with the remaining 5% not sure.

Typical of responses to riskinfo from advisers who support the FPA’s position was the following comment:

“I don’t think the FPA is doing this to negatively impact us or the industry. I feel they are doing it to improve the consumer’s opinion of our industry.  It will show the public that we are not motivated by commissions (which they think influences our product choices) and it will also help them value our advice.”

There were a number of  arguments presented by the 77% of advisers who voted against the transition to fee for service, encapsulated by comments such as:

“…how I am remunerated should be my choice and not the FPA. As long as it is disclosed to the client, why should the FPA be involved…”

and:

“As far as remuneration models, both advisers and clients should be able to choose the one that is right for their financial circumstances. In the 10+ years that I have been in the industry, I have yet to see a client who complains about how they are charged and how I am paid regardless of whether it be by fees or commissions.”

It is clear that a number of issues must be addressed in order for the broader question of fee for service versus commission to be resolved, not least of which is the question of whether life insurance products are, or should ever be, included in any transition to fee for service along the lines proposed by the FPA.  Again, there are arguments on both sides of this question, which need to be explored in much more detail.

But for this particular riskinfo poll, the question relates only to the broader principle of whether advisers should transition to a fee for service only remuneration model in the future.

If you have yet to add your vote to this important question, our poll will remain open for a further week, with the final outcomes to be relayed to all riskinfo readers and other interested individuals and organisations.