The Association of Financial Advisers (AFA) has released an\u00a0initial response to the FPA’s consultation paper on Financial Planner Remuneration.<\/p>\n
AFA\u00a0CEO, Richard Klipin<\/strong>, suggests that removing adviser remuneration by commissions, as recommended by the FPA,\u00a0takes away a consumer’s fundamental right to choose – a right which has been ‘enshrined’ in Financial Services Reform\u00a0legislation since 2004.<\/p>\n “The legislation as it currently stands protects consumer choice of adviser, advice model, products and payment options,” said Mr Klipin, who added, “The industry has spent many years building transparency into the system and financial advisers have been legally required to disclose how and how much they are paid, in dollar terms, for almost five years.”<\/p>\n Another concern for the AFA is that removing commissions may make comprehensive financial advice unaffordable for consumers at the very time they need it most, and that the ‘fees versus commissions’ debate is fixated on price when it should be focused on value.<\/p>\n “It is very easy to be distracted by insular debates,” Mr Klipin says. “But in what is proving to be the most difficult market in living history, it is vital the industry demonstrates leadership and takes a collaborative approach to educating consumers about the value of comprehensive advice.”<\/p>\n A further question that arises from this debate is how the FPA and AFA define themselves – as ‘professional’ and\/or as ‘membership’ associations, and whether there is a fundamental difference between the two.<\/p>\n According to Mr Klipin,\u00a0professional associations are by very definition member associations and must therefore be fully focused on representing the best interests of members.<\/p>\n From a member point of view these interests include:<\/p>\n AFA National President, Jim Taggart<\/strong>, says members do not want nor expect their professional body to tell them how to run their businesses:<\/p>\n “At the moment, our advisers are free to choose the business model that best suits them and best suits their clients,” said Mr Taggart. “They choose how they run their businesses and which clients they service. They also offer their clients a choice in how to pay for those services.\u00a0 It’s clear that clients want that choice which means choice is the way of the future.”<\/p>\n Meanwhile, MLC has registered its support for the FPA’s proposal to transition to fee-based adviser remuneration, stating it was ‘…a significant step forward for the financial advice industry.’<\/p>\n General Manager of MLC Advice Solutions, Greg Miller<\/strong> said, “The community’s concerns around financial planner remuneration continue to be a barrier to financial advice being recognised as a valuable professional service.”<\/p>\n Mr Miller continued, “The FPA’s consultation paper proposes clear and sensible principles for planner remuneration which will go a long way in moving the industry forward.”<\/p>\n “Separating the cost of financial advice from the cost of a product is critical in managing potential conflicts of interest and building trust and transparency in the financial advice industry,” said Mr Miller.<\/p>\n “Being able to stop paying the advice fee is also a critical principle – in no other industry would we question the right for a customer to stop paying for services if they no longer want them.”<\/p>\n MLC’s advice businesses include: Godfrey Pembroke, Apogee Financial Planning, Garvan Financial Planning, MLC Financial Planning and NAB Financial Planning.<\/p>\n Your measured feedback in our Comments section below will be welcome…<\/p>\n","protected":false},"excerpt":{"rendered":" The Association of Financial Advisers (AFA) has released an\u00a0initial response to the FPA’s consultation paper on Financial Planner Remuneration.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,3,270],"tags":[],"class_list":["post-873","post","type-post","status-publish","format-standard","category-compliance-regulation","category-general","category-remuneration","headers-new"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/873","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=873"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/873\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=873"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=873"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=873"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n