In a statement, the company said bundling of advice and product fees has been an “unintended consequence” of previously implemented policy designed to curb “dysfunctional behaviour” relating to product sales.
“What is clear is that bundling planning advice and product advice is the source of the embedded conflict that has distorted the advice industry for so long; we all know this and so does the royal commission,” the statement said.
“Separating product fees from advice fees is the first step to addressing the underlying conflict. It imposes transparency upon the system, which is key to sustaining consumer best interests. It allows consumers to better understand what service they are receiving; and to confidently benchmark and compare their services (and costs) with other readily available options in the market.”
DFS said fee unbundling “may be forced upon advisers” and that this may happen within a shorter timeframe than expected, meaning advisers should look to separate their advice and product fees and benchmark both as a means of future-proofing.
“As advisers learn how to integrate and deliver these services, the industry will transition to an operating culture that accounts to consumers through an objective and measurable framework,” the statement added.
“Once the transition is made, advisers can go even further by offering risk-benchmarking services to achieve higher levels of accountability.”
Update: The headline of this story has been updated to reflect the fact that DFS Portfolio Solutions is advocating the separation of ‘holistic’ financial planning fees from product advice fees.
Seeing how IFA allows articles on psychologists to say the word ‘fuck’, then how fucking stupid. Either he doesn’t know what he is talking about as we separate advice versus product fees in our SoA’s anyway, or else he’s saying we need to do two documents for the same client if part of our advice is for an investment. Another opinionated idiot with no practical client facing experience.
We’re currently looking at platform and portfolio providers to totally revamp our approach, will be crossing DFS Portfolio Solutions off the list. If anyone more senior than this bozo at that group is reading, may be worth putting a gag on those in your group that have no clue and cause you more harm then good.
At the very Least, any client that has been recommended Life Insurance should be offered a premium with and without Commission, i started this 15 yrs ago, and since then 95% of clients are happy to pay a flat fee for the insurance advice/ strategy / strategy / SOA and Implementation, rather than paying a loaded comm based premium for the next 10 to 20 yrs. Further, Maybe accountants need to start being a bit more transparent with what they charge, where the fee comes from and how it is ascertained, not may have any form of opt in, not many have a doc that confirms what the client was offered and what they received for their fee ( looking back ), just a one line invoice of X thousands of dollars. and maybe Lawyers should stop quoting a fee for a job that in pretty much every case ends up being significantly higher with zero explanation, then charging clients for fixing their own mistakes.
I am confused… we already state our fees for advice and product fees are shown separately in SOA and PDS. FDS is purely fees for advice/service. I doubt anyone bundles the product fees and advice fees into one fee in an SOA or FDS. Opt In means clients get yet another statement of the advice fees being charged. I fail to see how the article is of relevance at all. Or am I missing something? As for insurance commission – I have no issue as there is now a maximum commission for all products. Churning can be stopped by the life companies easily. Clients are happy. The mischievous few are causing the issues and sadly the regulators, gov and media etc are focused on this tiny minority and causing higher fees or at leat higher barriers to advice as a result. The idea of benchmarking is redundant – it is backward looking in our case which serves us poorly in a rapidly changing landscape. From my discussions, minimum cost of advice is already higher owing to risk. This will accelerate as the regulatory pressures bight and soon the only ones affording advice will be the upper middle class and businesses. The ones who really need it will be left to their own devices and end up on the public purse of Centrelink. Not the intended outcome, I am sure. Maybe FISO’s will be the ones to bear the brunt of the change in teh end…. costing gov even more as they struggle to keep up with demand. Or have I missed something?
The title should read: Advisers must separate planning advice fees from product advice fees
Based on this, we’ll need to strip out commissions on life insurance advice as well. You can’t have one rule for investments and one rule for life insurance.