The removal of the grandfathered payments for BT advisers will become effective from 1 October 2018, BT announced in a statement, however the company intends to honour contractual obligations with external financial advisers receiving those payments after this date.
“In recent years, BT has made numerous changes to its business to raise standards and these changes are the next step on that journey for BT,” said BT chief executive Brad Cooper.
“More than 140,000 customer accounts will benefit from these changes to their BT superannuation, investment, insurance and platform products.”
Today’s announcement is in keeping with comments made by BT Financial Advice general manager Michael Wright before the royal commission in April, when he told counsel assisting Rowena Orr that the change would happen in October.
Mr Wright said at the time that risk commissions will remain as per the life insurance framework.
pull the other one BT
“More than 140,000 customer accounts will benefit from these changes to their BT superannuation, investment, insurance and platform products.” Always helps to read the article before trollers blog !!
How will they benefit? Is the amount now not being paid to Advisers being rebated to clients or not? The article does not state what will happen.
YES IT IS. They are turning off commissions so if a MER was 1.6% with 0.6% commission, it will now be 1%.
Ok, I will personally check whether that happens on client reports after this change comes into place.
There is no gtee that there will not an increase in ICR, trustee fee etc
I can guarantee no benefit will be delivered to clients. All grandfathered benefits will go to BT executives- 100%
The provider will reduce the ICR by the commission net of RITC, so the provider will actually increase their fees slightly as a result of this.
Looks like we carry the hit again.
The words customer benefits and Banks/BT should not be used in the same sentence. The banks [i]always[/i] win and get away with anything (I’m sure Dover advisers right now would agree) so that means someone is going to pay. The question here is… just who?
Product manufacturers like BT that own AFSL’s actually prop up and subsidies the licensee so stopping these payments achieve nothing. Firms like BT and the banks are happy to do this because the underlying licensee then artificially creates a home team bias in favour of the Product. Whether that’s restricting email communications from other platforms, preventing BDM’s from visiting advisers, or requesting payments often $300K plus to be in order to be on the Approved Product List. Essentially a cult like following amoungst advisers is and can be easily created. Stopping these grandfathered payments really solves nothing as ultimately it’s just a round robbin of transactions, from BT to the BT owned AFSL and back via product fees and higher Aum/Fum. The real conflict is at this Product & licensee level, and won’t be solved until product and advice is separated.
This cross subsidisation of entities, ultimately drives out independent advice. A classic example is a privately run Advice award costing some independently advisers $10,000 to be rated whilst AMP advisers are free. Ultimately this damages competition and innovation. We’ve seen this already with our Financial Planning software being about 10 years behind the US. The Royal Commission has addressed none of these issues.
Great post, Anne. Nailed it.
Product and advice must be seperated for us to be taken seriously… And to drive professionalism.
Yes, very well stated Anne. I doubt any clear thinking adviser would believe anything at all a bank would say or promise on a matter such as this. There are many ways to skin a cat and The Bank will continue to increase, on a regular basis, the POUND OF FLESH it extracts from each and every client. The life companies do a similar thing with premium increases. They make great noise about questionable policy benefit upgrades to clients then increase premiums by 30% or 40% (real increases happening NOW). Client gets SHAFTED every which way but loose. Such a shame the media never follows this up with any degree of passion. it is shameful and immoral. Why should we advisers expect any better treatment than clients from these con-people.
It begs the question of how long it will be before the rest of us are affected by this. i.e. when will the IFA channels be hit with the same stick?
A major omission from this article is confirmation of whether the commission was rebated back to the client or kept by Westpac. why such an important element excluded ? If all Westpac are doing is changing a remuneration arrangement with their employed advisers and keeping the commission inside the product this is a misleading article and mischievous on BTs part
Put your tin hat back on John.
Sorry mouse but you will have to explain in plain English what your point is.
I believe it may refer to this – https://en.wikipedia.org/wiki/Tin_foil_hat
Oh so you think I am paranoid when I question why Westpac have not fully disclosed what they have agreed to do ? How will the clients be better off ? If the commission is being stopped will Westpac employ advisers to service these customers for free ? Call me a cynic but I find that hard to believe. Alternatively will the advisers replace the trailing commission with a service fee ? Or will the customers become orphans and have no contact with an adviser and have to deal with a call centre ? I will keep my tin hat on until I receive a thorough explanation. How does Wikipedia define an institution that acts self righteously despite the flaws in their own behaviour ? Hypocrite Delusional
“More than 140,000 customer accounts will benefit from these changes to their BT superannuation, investment, insurance and platform products.”
Is that not enough? If it was kept by Westpac there’d be no benefit to clients.
No external advisers use BT anyway, they are rubbish along with their sister company Asgard.
How exactly will clients benefit? They seem very unclear if the fees will be rebated to the client or retained by BT/Westpac. Considering the approach taken to LIF it is almost a guarantee that BT/Westpac will retain the fees, with absolutely no benefit to the client.
Read the announcement. They’re turning off the commission. The customer will benefit. there is no hidden agenda here.
Ok so, the client’s fees go down by this commission now being turned off. That’s what you think will happen Gen Y is it?
That’s precisely what’s happening, past-it Baby Boomer is it?
Yes it will. Why would BT in the current environment, come out with such statements if they were misleading?
Well, look where they took the industry! It is very unlikely these hapless, self serving bank execs will make better decisions (unless forced) or be any wiser now.
Gen Y ask yourself this question. Were the salaried advisers servicing these clients ? I suggest they weren’t so Westpac are covering their backs. If they were, then are they replacing the commission with a service fee or offering the service for free ( Westpac pro bono service – really ??) Are these customers now orphan ? Who do they go to for advice and service ? How are the clients better off ? The assumption of your response is that all customers would prefer a fee reduction and no service or support. You know what they say about making an ASS out of U and ME !!
Did you also believe that insurance premiums would go down because commissions were being reduced? I have not had one client benefit from this, only the insurers. Don’t be so naive.
Maybe look at longer term increases being lower and slower rather than immediate drops in rates?
great news, clients no longer paying commissions to the big bad banks
cant wait for the big bad banks to demand the rest of the industry follow suit
bank advisers must be salaried employees given the leadership roles in the industry that management is taking
Yes, they are following suit with NAB FP.
NAB FP led the way with “stopping” investment commissions.
By “stopping” I mean they stopped paying the advisers the money and took it all for themselves, making some staff unable to pay their mortgage. This was years ago so BT is really behind the ball with these clever tactics.
If you think BT is doing this to be nice to their clients think again.