Speaking to Fairfax publication BusinessDay, head of private banking at Credit Suisse Edward Jewell-Tait said the advice sector must take measures to remove conflicts of interest.
“The notion of cross-selling has been a popular strategy for a long time. And when it involves selling a product or service, there’s no problem,” Mr Jewell-Tait said, “but when it’s couched in terms of financial advice, it becomes more complicated.”
“It is simply not possible both to provide advice and sell products at the same time and problems inevitably arise when advisers are incentivised to give particular advice,” he said.
“You simply can’t have inducements. You can’t have a situation where people are paid commissions on the products they sell at the same time as giving advice,” he said.
Credit Suisse pays its staff a fixed salary with a bonus calculated on qualitative measures such as client satisfaction rather than tying remuneration to the number and size of trades a client executes.
“For us, if you’re going to provide advice, you can’t remunerate staff with commissions,” Mr Jewell-Tait said.
Another left wing financial services devotee that does not like commissions. Well your on your own son like the ex MLC guys who gutted that company with fee for service shoved down its throat. Wonder what the NAB thinks now of its little loss maker.. Stop dreaming guys its the people who do the business who make the trades who get paid.
I have two wishes: that advisers who write to these pages learn to spell and that they stop and think through their own logic. Suggesting that someone is wrong and that you’re just doing the same as them makes as much sense as Patrick and Daniel. Gerard, I feel your pain, but perhaps you can stop wondering how to charge the way our client wants and instead charge the way you believe is right. Dentists don’t worry about how you’d like to pay, they just fix your teeth and you get the bill. You work out how you’ll pay. You may even have the forethought to take out medical insurance so that it’s affordable. Commissions are conflicted and no one likes them but some think they’re stuck with them while some just don’t understand them and don’t know they can side-step them. Smart clients and smart advisers have nothing to do with them. My clients are very happy to pay fees for advice that’s totally in THEIR interests, for anything they need.
I agree with the conflict of selling and advising and there is a problem which has to be rectified. But can anyone advise how an insurance adviser or stockbroker can do their important tasks without a commission structure. I know some will say a fee based on time and experience is applicable but mostly the clients do not want to pay directly. Secondly how does a stockbroker charge a fee for a small trade of $20,000 or a large trade of $1 mill. Both make take the same time, both may involve the same amount of research and both have all the overheads of the office.
If anyone can help please tell me.
Is this as opposed to Bonuses & Inducements for Private Banking Heads???
Note to self…Add Mr Jewell-Tait to the Mr Whitely Box of crazy.
This is a biased comment that is easy to make given Credit Suisse’s target market of super wealthy individuals and no focus on risk insurance advice. Let’s see them try such a model with the rest of Australia’s “normal” population and escpecially when it comes to addressing the underinsurance gap.
What a load of crap, another mouth piece,same thing Credit Suisse with just another name! you banks invented that trickery by just renamiming commissions, as a bonus, performance payment, increased salary etc etc etc, you still have them flogging your own products.you people are likr poison to this wonderful industry.