The Trowbridge proposal to place restrictions on the income of financial advisers is counter to the spirit of our economic system and will turn off potential industry entrants, one dealer group boss has warned.
In an upcoming opinion piece for ifa sister title Risk Adviser, Shartru Wealth chief executive Rob Coyte said that while there is a legitimate debate over how to attract better educated and professionally minded advisers to the industry, the Trowbridge report will actually do the opposite.
“One way we don’t [help attract more educated people] is by regulating the income these people can earn in a way that Communists would have been proud [of],” Mr Coyte writes.
“The suggestion from Trowbridge and the Financial Services Council to limit the amount of money anyone giving insurance advice can charge is something you will not find in business or finance text books.
“Surprisingly, Trowbridge states ‘the Initial Adviser Payment (IAP) is capped to deliberately fall short of the estimated cost to implement’ – maybe insurance advisers will be able to register as a charity to attain a favourable tax status for such benevolence?”
Mr Coyte suggested the most mutually agreeable solution to any problems in the risk advice market would be a hybrid commission model, but added he did not take any issue with the current upfront commission structure “given the nature of insurance advice and the sales process”.
He said the new obligations enforced by FOFA should be given a chance to work in practice before new obligations or regulations are introduced.
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