Changes to adviser remuneration will push advisers into institutionally-aligned dealer groups with narrow APLs as a means to survive, argues insurer and wealth manager ClearView.
Commenting on a submission made to the Life Insurance and Advice Working Group, ClearView said it has cautioned the inquiry that any “experimental changes” to adviser remuneration could “strangle the independent financial planning community”.
“Significant reduction in overall remuneration of financial advisers will severely impact the profitability and sustainability of independently-owned advice practices.
“[This will force] many advisers into institutionally-aligned dealer groups with narrow APLs as the only means to survive,” a statement from Clearview said.
ClearView chief executive Simon Swanson said the submission also calls on the working group to focus on driving competition, innovation and improved customer outcomes by addressing a number of conflicts of interest.
“We believe there is an irrefutable case that the default position should be for an open architecture for approved product lists (APLs) so that advisers are not unduly restricted,” Mr Swanson said.
“Shelf space fees are inequitable in the financial services industry and we believe they should be banned.
“A number of dealer groups require upfront payments, which start from around $100,000 and rise to over $300,000 per annum for life insurance products, to be placed on their APL,” he said.
Mr Swanson explained shelf space fees lead to customers often being recommended a product not because it’s the most suitable or appropriate, but because of an insurance company’s willingness to pay that fee.
Within the submission ClearView also proposed the words ‘commission’ and ‘incentives’ be abandoned because of the negative connotation they carry.
Instead of these terms ClearView proposes they should be replaced with alternative terms such as ‘adviser service fee’ or ‘financial support’.
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 23 Jan 2019Adelaide adviser permanently banned from industryBy Eliot Hastie
- 23 Jan 2019Bowen slams ‘woeful’ handling of royal commissionBy James Mitchell
- 23 Jan 2019Gender super gap lower but still at 34%By Adrian Flores
- 22 Jan 2019Advice issues stem from writing of SOAs, says RafteryBy Adrian Flores
- 21 Jan 2019Federal Court winds up CFS Private WealthBy Eliot Hastie
- 22 Jan 20192.44m Aussies suffer from financial stressBy Sarah Simpkins
- view all