Latest Poll – Impact of Ban on Grandfathered Commissions


Will the ending of grandfathered investment and superannuation commissions have a significant impact on the future viability of your advice business?

  • Yes (69%)
  • No (25%)
  • Not sure (6%)

The ending of grandfathered investment and super commissions is a mess. While there may be commitment from the Government and the industry to address conflicted remuneration – for all the right reasons – its execution seems to be mired in a big bowl of porridge.

Rarely has it been more appropriate to reflect that the devil is in the detail…

Rarely has it been more appropriate to reflect that the devil is in the detail when it comes to actually applying the processes that will bring conflicted investment and super commissions to an end by 2021.

It’s been implied in PJC hearings last week that ASIC made recommendations to the Banking Royal Commission to end grandfathered commissions without having undertaken the necessary due diligence that may have flagged the significant issues surrounding the ending of grandfathered commissions (see: ASIC Grilled Over Due Diligence…).

Some of the questions raised by the AFA alone have demonstrated the complexity in understanding – and then unwinding – grandfathered commissions and the products in which they reside. Those questions include:

  • How many clients hold accounts that are subject to grandfathered commission arrangements?
  • How many of these clients are currently receiving advice or services from their adviser and wish to retain their existing arrangement?
  • What is the total amount of invested funds in these products?
  • How many product providers and how many financial advisers are impacted?
  • What is the total amount of annual payments for grandfathered commissions?
  • What is the total amount of annual payments of volume bonuses and shelf space fees?
  • To what extent does this include payments with respect to life insurance held through superannuation via a group life arrangement?
  • How many of these clients are in products where adviser service fee functionality is currently available, versus not available?
  • How many clients are prevented from being moved to another product due to factors such as exit fees, capital gains tax, Centrelink grandfathering, insurance or the cost of financial advice involved in the facilitation of moving?
  • What is the contractual basis of these payments and what is the mechanism by which they might be turned off?
  • How many contracts between product providers and financial advice licensees need to be renegotiated?
  • What is the implication for the age pension benefits of a client who might receive a grandfathered commission rebate payment, particularly where it is in relation to a lifetime or immediate annuity product?

Best wishes to the Government, the regulators and the product manufacturers in sorting these questions, as we spare a thought for the thousands of advisers whose businesses are to be impacted by the end of grandfathered commissions.

How will this impact you and your business? If you’re a risk-focussed adviser, the answer may be that you’ll be impacted to a lesser extent. But as the greater proportion of advice businesses deliver either holistic advice propositions or pure financial planning, the majority may be impacted more extensively.

While we don’t know as yet whether there will be pragmatic accommodations made to existing arrangements that will allow a smoother transition away from grandfathered investment and super commissions – and we hope these accommodations will be made – we’re still keen to know how the overall end to this form of conflicted remuneration will impact you and your advice business.

Tell us what you think and we’ll report back next week…


  1. Another question to be raised. How will the removal of grandfathered commission benefit the client from a cost perspective. Will product providers reduce fees accordingly? Hopefully also there is a mechanism to allow the replacement of a GF commission with a fee, withing the GF product, where the adviser has been actively engaging with the client.

    • I look forward to lifetime annuitants who purchased a product twenty years or more ago receiving an unexpected boost to their monthly income to match the removal of the commission. Then I may be able to feel justified in billing these clients the token amounts that I am receiving for helping them with Centrelink matters etc.

      • So true Old Fella. And no doubt you have not charged them a fee to help them out with their Centrelink issues. We, the money hungry greedy advisers who deliver no service.

  2. Lesson…if you want to denigrate something first brand it with a name everyone can get upset with. None of the grandfathered commissions I receive are “conflicted”. My clients are in the older, really advantageous (from both a tax and Centrelink point of view) lifetime annuity products for their own benefit, not for mine. No conflict there. But I’m being put out of business by financial institutions who have decided I should no longer receive those commissions, and by the Government which now imposes outrageous ASIC levies so I can be “regulated” by an organisation which can’t even explain grandfathered commissions to the Hayne RC.

  3. Understand the frustration, but I voluntarily & systematically removed my grandfathered commissions over the last couple of years. The writing on the wall was clear and it was best to seek alternative strategies to replace that income. Whilst we all know that industry super is NOT necessarily in every clients best interest – to continue to take [albeit a small] % of multiple millions of FUM [and especially, the ongoing contribution fees of up to 5%] was not going to pass the litmus test. I stopped advising on ‘new’ super & investments several years ago and switched to 100% risk advising. I also took hybrid commissions on risk since 1993. All in all, in my early 60s I’m well place to exit the industry on 01/01/2021 – albeit not my wish, but reality set in a long time ago. And I bet Rob that the product providers won’t be in any hurry to reduce the clients’ fees. I’ve not seen any change to the fees charged by one life office since I turned off the asset fees a year ago. They only create the problems for us Rob, they never fix them!

  4. I truly do not think any of these policy makers and adviser “bashers” have any idea of how and why this payment structure was established in the first place
    In the early 1980’s everyone was a salaried tied agent with the ability to earn commission on top of the minimal retainer they received. Super was paid by the insurer as well as workers comp.
    I was at that time associated with MLC and they came to the decision ( along with many others ) that it was not viable to continue to operate like they were. Profit was not growing as business was not being retained and serviced.
    We were approached with the idea to become “contractors” for want of a better word and an ongoing share of the policy entry fee paid to you to support grow and extend your business. A buyer of last resort was also incorporated by many to keep the interest their in providing a life time service with a saleable business at the time you wanted to retire. Everyone embraced this and the fact that many served their clients ( and some still do) into their 70.s and 80.s is testament to that. It was great to be of service to the many clients we now called friends and have someone value this advice and service financially as well.
    It was a legal and beneficial arrangement that could assist you in building your business long term not an additional fee charged to clients
    The rules were simple supply support and advice to your clients so they received and got long term value
    40 years has gone by since then with Clients being serviced 24/7 for a small pittance cost wise for the value they have received. ( no $3000 annual service fees then !) Yes I still have clients that have been with me 30 years plus and I bet I am not alone
    This outrageous legislation, 2 year responsibility period reduction of commissions based on so called BS conflicted remuneration to a level we can just barely get by on along ridiculous
    exams that pertain to be what the industry needs to ensure the client is getting a fair go yet nothing in relation to what some advisers ( risk) actually do and mountains of red tape that have all lead to advice being out of the reach of those who need it most. Let’s not forget the abolition of conferences where great ideas where shared and leant and saved the insurers millions in cost ??? which was just the start of the downfall of trust and the beginning of insurance company greed.
    No wonder advisers have given up and are moving on
    And now let’s rake in that little bit more from them and crush altogether their business and families
    Clients are not the only ones getting hurt in this mess
    Suicides by people who see no other way out
    How sad and who is responsible ? Take your pick

  5. Its about ethics……i voted “Yes” as i see most people in need will not be able to access advise. We are forced to focus on the rich simply because our costs are set to rise for some by 300%. I started over 30 years ago and focused only on those in need rather than how wealthy they were. I always said that when i cant afford to serve those in need then its not my role. Ethically, the RC and government have made big changes that will result in a question against our ethics. i cant serve this industry as my ethics are not going to be compromised. I once did in recent years charged about $2200 for a retirement plan. An adviser similar to me and even more passionate for clients quoted $9,600 for the same advice about a month ago and shared with me that she hopes they dont come back. Great isnt it Mr hayne!?? How does compliance work when we are hit with regulation that was no in force at the time of action? How does un-grandfathering work? (and was bipartisan) Not just in turmoil, but who would want to remain? very few i feel.

Comments are closed.