Key players in the independent and non-aligned advice sector have backed moving to a hybrid commission structure as a better option than the Trowbridge proposals.
Reflecting on AMP’s decision to mandate hybrid commissions for its aligned advisers and adviser insurance customers, Les Mace, chief executive of non-aligned licensee Risk and Investment Advisers Australia (RIAA) and chair of the AIOFP’s risk committee, said that while any reduction in remuneration will affect non-institutional businesses, it is better than the alternative.
“Any reduction in adviser remuneration will be more heavily felt by non-aligned advisers and licensees because the reduced income cannot be offset by the ‘internal’ sharing of product margins,” Mr Mace told ifa.
“However, a hybrid commission basis is preferred to the long term Trowbridge proposal and enables an adviser to be fairly compensated for the advice and work performed.”
Mr Mace said the AIOFP is pushing for an industry-wide outcome that is “fair for all” and takes into account the importance of a healthy independent advice sector.
Non-aligned group Centrepoint Alliance has also backed a move to hybrid and level commissions, following a vote by the listed company’s adviser network.
From 1 July 2015, advisers licensed by Centrepoint’s Professional Investment Services and Alliance Wealth dealer groups will move to hybrid or level structures, while upfront commissions will be banned.
Centrepoint CEO John De Zwart – who was a member of the Life Insurance and Advice Working Group – said he is proud of his advice network for supporting the motion and “showing leadership”.
"This will remove any perception of conflict of interest in advising clients while ensuring they can access the quality advice they need,” Mr De Zwart said.
"It will also ensure that advisers remain viable and are appropriately rewarded for their valuable advice. It will also encourage new advisers into the industry which are vitally needed if we are to seriously tackle Australia's chronic underinsurance problem.”
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