In its response to the royal commission’s second round of hearings, the FPA concurred with counsel assisting Rowena Orr QC that it may be appropriate to review the practice of permitted conflicted remuneration for financial advisers under the FOFA grandfathering clause.
“Grandfathered commissions has led to an environment where many clients are paying fees and yet receiving no services,” the FPA submission states.
“Ceasing grandfathered commissions and making all ongoing fee arrangements subject to opt-in will result in grandfathered fee arrangements quickly coming to an end where no services are being provided to consumers.”
The submission goes on to make an official “FPA recommendation” that “grandfathered commissions on superannuation and investment advice should be phased out over a three-year transition period”.
However, the submission added that the statutory carve-outs to the conflicted remuneration ban should be maintained.
The corporate regulator also took aim at grandfathered commissions in its submission to the royal commission.
“ASIC believes that the grandfathering of commissions should cease as soon as reasonably practicable and to the maximum possible extent,” the submission said.
A full list of the submissions made to the royal commission can be read here: https://www.ifa.com.au/news/25505-royal-commission-round-two-responses-released
My advice would be to leave the industry, and then claim income protection for mental health due to the current situation. This would effect the banks bottom line….
I would also like to ban taxpayer funded salaries, allowances and entitlements to all our politicians as they have been rorting the system, acting in self-interests with little regard to the well being of our country. The ban is effective immediately.
My Feeling exactly.
These dopes at ASIC wont have anyone to regulate in a few short years they will all be on the dole queues themselves where they belong.
Cut off funding all these political leeches and all their departmental bureaucratic lackeys
Well, It certainly seems that all the advisers, like me, who chose to become ‘risk specialists’ and leave investment business behind are being vindicated in all this. It seems a good ‘pure risk’ client base is still worth at the very least 3.5 x renewals. With the abject horror of the FPA attacking their member’s best interests (I mean advisers here, not CBA or AMP!) then it seems that ‘pure risk’ client bases will be worth much more as years go by. There is no workable way whatsoever to replace commissions on pure risk. Clients who engage an adviser for risk advice and NO associated investment advice will not cop fees on top of premiums – blind Freddy knows this by now. Mark my words, Risk-only client bases will be the jewel in the crown for advisers needing a reliable income stream once the Royal commission finishes. get out of the FP industry by all means . . . and come across to the insurance industry – blue skies only over here!
Clearly this is a sarcastic piece.
“Clearly” you are mistaken. Every word, I would challenge you, is true from my perspective, Risk clients bases, good ones, are well known for not only being hard to find but when they are the seller controls the price. Where is your evidence to the contrary?
Sure, and premiums have risen by how much in last few years? Industry losses and lapse rates? (among other things) Oops. I forgot, the premium increases are great opportunity to ‘review’ and rewrite your existing clients….
If it is so great after all, why have the big institutions all sold out???
Many know that some years ago major financial institutions considered restricting commissions to level only, with a 3 year clawback. Soon after we got the ASIC report and LIF (close enough).
Commissions are a dirty word now and there is no going back.
My sense is your talking your own book, hoping you can palm it off to someone at 3x to fund your retirement. Good luck.
I think its more likely a major tech stock will enter this space using some kind of fancy algorithm to partly underwrite (e.g. via tracking of financial transactions), and then distribute direct to client.
Your last paragraph is relevant. Only a matter of time before risk advisers (as we know it) are redundant. Yes, we may provide recommendations on the level and type of cover – but from there it will be outsourced straight to the big risk factory who will do the rest. They will instead be paid by the product manufacturer. Will we still have to do the 50 page SOA? Probably. It’ll be a loss making exercise, so most of us will avoid if we can or get the client to arrange the cover themselves. As long as we’ve recommended the cover our bacon is saved.
Funny. On a side note some of my Insurance cousins do need to visit the Netherlands or at least Google “Insurance commission banned Netherlands”. mmmm ticking time me thinks. Not saying I agree…just saying it’s an interesting read for those riskies. have a good day.
You say that, but I write strictly fee for service risk, and clients do pay the fee. When you can wind down the premiums 25-32%, they can see they make the fee back very quickly, sometimes in the first year alone. Less lucrative but its better for most clients and people would be surprised how easily they will pay the fee if you actually tried it.
What you are saying is that your value proposition for getting clients to pay a fee for your advice is that you dial down the commission and they benefit over the long term. If commissions no longer exist, there is nothing to dial down and there goes your value proposition. In short, you need commissions to exist, even if you don’t accept them. Clients deserve to have a choice and the current model allows both commission only advisers, and your preferred method to exist.
bingo
No, I am saying that when premiums are significantly cheaper they can afford to pay a fee. Its a myth that they will not pay a fee. When commissions are gone, they are still going to need an adviser and will need to pay a fee, its up to advisers to compete on fees and competency. It is particularly easy at the moment though when you explain commission is well and truly built into the premiums, hence they are unaffordable for some.
DREAMER
I’m currently a young compliance person at AMP and member of the FPA. I don’t think they’ve been turning off adviser service fees. This is especially the case when they purchase a retiring planners business and park them in what we call at AMP the sess pool awaiting a new fool, I mean adviser to come along. I think this is just wrong. I’ve tried to tell my senior manager but I’m afraid I’ll lose my job and I’m pregnant with 9 children and my Husband is now on a TPD claim. I’ve been thinking of telling the FPA but AMP pay’s my FPA fee for me and also AMP Financial Planning pays them a lot of commission I mean money via their professional partner program and brings them a lot of new AMP members every year. I am pretty confident because of this conflicted relationship they’ll just laugh at me. I thought this was what “professional associations do” i.e represent members. What should I do? I reckon if this news gets out it will damage all planners regardless of who they work for. So don’t tell anyone pleazzze. However I know I can trust people here to be quite…after all most are FPA members and are happy with this status… Please help I think they might even appear before a Royal Commission soon.. Kind regards… confused. PS My grammar and spelling is too poor to leave the advice industry and I can’t write succinctly so will never be an actual planner so I can’t leave.
Pregnant with 9 children, I am sorry but you need to contact the doctor asap
I have NO PROBLEM with the removal of grandfathered commission. Just write me a cheque for what i paid for these commissions on the understanding that they were grandfathered, and i can clear my debts and be left with a pile of ‘worthless?’ names.
But I reckon the day a government will take responsibility for their actions and write a cheque, just as ASIC or FOS would ask us to do if we stuffed something up, is beyond my lifetime.
Good luck to any of us trying to sell a business on anything other than EBITDA in the future.
Maybe I’m confused but assume you didn’t buy these “clients” receive a comm and do nothing other then refer to these people as worthless names. Here is a novel idea service the client and go to a fee for service model. If you service the client there shouldn’t be an issue but if you were just going to wait out the 2 or 3 years do nothing for these worthless names until you got your investment back I’m not going to cry for you I’m afraid
Exactly Brisbane planner. This whole argument really shows how bad the whole industry has been unfortunately. The gravy train of buying books to never service is over, maybe this will actually lead to us being considered a profession eventually… Who would have thought you should have to actually service your clients to get paid! What an injustice! Fortuantely a lot of these people are DFP/grandfathered CFP type operators who will be leaving when the education requirements come in anyways.
A CLASS ACTION IS THE ONLY WAY TO STOP THE BAN ON GRANDFATHERED COMMISSION OR THE GOVERNMENT HAS TO COUGH UP.
Yep thats where this is heading, talk about a restraint of trade. absolute joke
I like this idea. It makes sense. The product providers buy the clients back from advisers at the 4x rate and then rebates the commission to the clients account. The legislation must state that the client fees are reduced by the commission and there are not other fee increases on the product.
The client will benefit from lower fees.
The adviser (who operated within the law, and also as within the system created and encouraged by product providers and licensees) is not the party who is disadvantaged. The product providers who created the mess are the party that wear most of the costs. Advisers effectively get their 4 year phase out of commission in a lump sum to extinguish the debt on the books they purchased so they don’t have to sell their home or cut jobs. Solves that argument. Advisers are not going to profit long term by free trails in the future, but can break even on it now.
The product providers are impacted heavily by buying the clients. And not being able to recover it by continuing the trail or increasing other fees. It is another lever to pull to ‘fine’ the product providers and having the correct party wear the costs. Clients win, advisers get to offset the legislative risk and product providers don’t get to have someone else pay to clean up their mess.
We all know the other way the providers are hoping this will play out. Commissions are banned, the adviser wears the financial burden, and the client sees no reduction to their product because the providers system can’t work out how to rebate it, or they just increase another fee. Make sure the legislators understand how this works.
I am a sole financial planner running my own business and in the final stages of borrowing money to purchase a client base which the business income generated is 60-70% grandfathered. Does this mean I shall now halt proceedings??
Yes. Otherwise you will join others who have done exactly that, and by no fault of their own, now face financial ruin. I fear for the mental well being of a couple of my colleagues now talking of ending it all.
When we advise clients, we keep one eye on legislative risk. We cannot predict the future, but we keep in mind the risks of putting all our eggs in one basket.
Commissions were banned when FOFA was introduced. That they are grandfathered means they are being tolerated, not accepted. The fact we now require Opt-in makes that clear.
Now we have the Royal Commission, with 9 or so months to run; there may be a market correction in the next 12-24 months; and a Labor Government.
Any one of those alone is enough to affect public sentiment. Instead we look to a trifecta. There will be much dissatisfaction with the old, and it will create the foundations for a new way of doing things, with fintech and Millenials to come to the fore. Successful service firms will be those who can protect their reputations, and ride these changes in their sources of clientele and revenue.
You take your chances. I’m happy to hear alternative views.
you are mad. stop now
You’d certainly want to know how many of those clients have an ongoing relationship each and every year. If not an ongoing relationship why not. 60-70% that is way too high for an uncertain income stream. My grandfathered income is 5%. Is it an AMP business?
Run for the hills.
Sure puts in a bind, do you put a clawback provision if this income is lost within 12 – 24 months??
Not sure if I am considering selling but not sure what I will put on>
Good Luck
good luck man, i hope you find a buyer, i am one of the few that [b]may[/b][u][/u] be left standing but i’m not borrowing to buy anything until there is certainty around what is happenning
the whole industry is in a big mess and i cannot see anything being sorted too quickly
it’s going to be a long hard mother of a journey too bad i have invested so much i cannot leave
any suggestions ? for a well qualified FP to move into
Yes, I have a suggestion. Get a job with ASIC. Bloated salaries, you can charge annual fees to the industry at a crazy $ rate you determine, not have to do anything for it, and zero accountability. Alternatively, work for the unions. Same sort of thing.
Google “Fiduciary Duty” and have a think if it’s a high risk strategy.
If you’re still thinking about it, make absolutely sure the purchase includes historical files and current contact details for all the clients. Ideally you want a personalised handover for each client from the exiting adviser as well. If you don’t get these things you are not really purchasing a client base. You are purchasing a prospecting list of questionable quality and diminishing value.
Given the servicing commission was agreed when the investment was established and is built into the unit price how exactly is it turned off and on what basis ? The arrangement to set up an investment was agreed between the adviser and the client. What right does the fund manager have to intervene ? If the servicing commission can be turned off why stop there ? Why not turn off the platform admin commission and the fund manager commission as well ? Who is the arbiter over whether fund manager fees and platform admin fees are reasonable ?
Keep in mind clients probably didnt agree to be passed around and sold off from adviser to adviser without being serviced either…
Ah…… yes they did, or should have – we had to send a letter to every client with their approval, I thought it was standard practice.
Respect to you for doing that, I know most dont!
The one thing that I have yet to see addressed is how are they going to handle the grandfathered centrelink arrangements that apply to a lot of these policies. We have a large number of retiree clients on these legacy products but it would be completely against best interest duty to make any changes due to these reasons. Another reason why i will never be a member of the FPA. We have already seen so many changes that have brought about unintended consequences for clients, lets not add another and do some proper research beforehand for a change please.
Absolutely understand how Serious Troubles is feeling. Decisions made by the regulators and Associations on how Financial Planners are remunerated for their advice/services totally ignores the history of how practices have been bought and sold. Is it fair to remove the grandfather provisions at the financial detriment of the Financial Planners who have bought a business based on current regulations? Is it fair to change the regulations and not offer compensation to the Financial Planners who will lose a business asset which provides the income required to meet obligations to the bank? Their is a lot of talk about what is fair to the client how about what is fair to the Financial Planner trying to run a professional Financial Planning Practice.
Good luck with ‘Fair for Financial Planners’. One look at the headlines and its clear that’s just not going to fly. The general mood is shifting, and fast.
I will call it now quite clearly – everyone who is a member of the FPA should cancel their membership immediately and ask for a refund back to about the time they took a more regulatory stand which was about 2 years ago (arguably longer) rather than being a voice for Advisers.
I think a class action will be more appropriate. For all membership fees and costs incurred in studying for the CFP, which FASEA now say is worthless.
Yep. I notice they are still advertising that the CFP course is equivalent to AQF level 9. Even if it’s “like” something it’s not actually the same thing until you get that tick. To claim otherwise from a body that wants to be professional association is extremely unethical.
What about those advisers who do provide an annual review to these types of clients?
Not every client wants to pay a feed for service but still wants to have an adviser available to help them when needed.
My suggestion is if advisers are providing an annual review service to all grandfathered clients then commissions must remain.
perhaps ASIC and FPA should have read the PJC when FoFA was announced… dangerous for retrospective legislation and the constitution might get a working over (just terms). I also wonder if these intellectuals work out that people at anytime can get out of commission products.. it’s called taking a proactive interest and updating your policy..
Can we BAN the AFA/FPA for their non-service of their adviser members?
We pay them yearly to represent and support us, yet we get no service from them?e.g LIF
If you want to ban commissions, ban mandatory association fees too – as these associations including the TPB GET MONEY FOR NOTHING.
Haha!! Too true. Well said. Let’s all shout THIS a lot louder. Call them on their SH*T!!!
So my business partner and I last year decided to buy a retiring advisors business. We borrowed heavily against our houses to do so. There are thousands of grandfathered clients in that book. We spend 10 hours a week easily just doing admin for those clients as when every they need anything they call our team. We spend the rest of our time reviewing as many of these clients as we can and any new business we can write moves into our opt in book.
And now our very own association is recommending that in a few years our entire business income should be switched off. Firstly that means no one will be there for any of these clients…not a great outcome for the clients.
And then our business will be unable to pay our bank loans interest let alone capital repayment. We will have no option but to declare bankruptcy. And that bankruptcy will preclude either of us from ever working in the financial services sector.
Just stunned.
Next week we both will be exiting the FPA. That’s a promise.
You spend 10 hours per week servicing thousands of clients….?
520 hours per year split between thousands of clients…. You don’t see a problem with getting paid for that…? Less than an hour on each client per year… Seriously how can anyone complain about this, no wonder the industry is getting slandered, we deserve it…
So are you saying those 520 hours should be for free? I’m sure he has many clients in their paying less than $100. p.a. How much free service should he give them for $100. p.a.? Isn’t being there for them when they need it value in itself on top of all the administration that’s required just he can answer their question when they call in?
Im a sole financial adviser running my own business and i’m in the final stages of borrowing money to purchase a FP business that the income generated is 60-70% grandfathered. Does this mean I should now halt proceedings?
Yes I think it does
Please, somebody clarify for me if this is insurance/risk grandfathered commissions of just those in super/ins they’re talking about.
Our firm is an AMP firm. I rang the FPA this morning and canceled our firms and my personal membership. I was mistaken in thinking that the FPA looked after our interests. Silly me.
Spoke to 6 other principals today and all are doing the same.
I always wondered why fee for service guys in return for a service where caught under FOFA yet commissions for no service were excluded. Then again in regards to regulation of this industry has nothing to do with logic.
Gosh Anonymous has a lot to say!
I will leave debates about grandfathered commissions to others – I did wonder whether abolishing an existing right to receive commission amounts to an acquisition of property contrary to the Constitution.
Yep, the lawyers will be lining up for a class action of mammoth proportions
I like this one. So if the right to receive an income stream under an exisiting contract is ‘property’, are the government going to force the acquisition of that property?
Dear FPA. Culture is set from the top. Leadership is not being caught out with your pants around your ankles at a Royal Commission and reacting. Leadership involves being a leader and stopping your own relationships with product providers like CBA Financial Planning et al first.
Percentage based platform fees not an issue?
For what is a fixed cost technology?
Elephant in the room?
And what happens to advisers who purchased practices using post FOFA rules using their house as security. Based on this these people could loose home etc through no fault of their own. The FPA has a hide. Over the coming years these grandfathered products will die a natural death anyway. Oh and what about advisers who are say 60 looking to sell as they will not meet the education rules that commence in 2021 – how much is their practices now worth based on years of work with clients.
it puts a whole lot of people in very difficult position financially
effectively 0.8 times recurring adviser fees same as accountants
you won’t even get that there will be so many selling so risky best just not to buy any
Totally agree its alright for the FPA to side with ASIC after all they haven’t brought a book of business based on the FOFA rules because our membership pays their wages. So glad i’m going to the Perth FPA roadshow as this will defiantly be questioned to them. As with original blogger of this post, it will die a natural death anyway.
Your membership fees pay just a small fraction of there wages now they’ve morphed so much. A third of their income comes from the CFP program. A third comes from the FPA congress and a third comes from a mix of AMP Financial Planning and members. So you rank at least 4th in order of importance…somewhere around the FPEC revenue I’m guessing. To be blunt they don’t care..
Yes but if you are no longer a member paying membership fees then there is no need to go to the FPA congress or pay for stupid CFP study is there?
Nobody else’s fault that they bought a book/practice on the assumption they wouldn’t need to service the clients and still get paid. Just unethical to do that in the first place.
If they actually service the clients they can just switch the grandfathered commission/fee arrangement to a modern one and no harm done, clients will continue to pay for the service… A lot of ‘woe is me’ here seriously unless nobody actually services their grandfathered clients?…
who says they’re getting no service?
I’m just sitting here shaking my head.. why stop at financial planning grandfathered commissions… how about mortgage trails, mobile phone retailers, electricity spruikers, tv/car salesmen… the financial planning profession will be decimated… who pays for the loans against the books that planners have purchased in good faith? Who factors in the ripple effect of planners going broke and all of the people that ride on the back of planners for a job….
It cracks me up that our esteemed Politicians and Left Wing Lobby groups (that milk taxpayers for every cent) are demanding this change. This is truly madness.. even the FSU in their submission made the point that grandfathered commissions being removed would unfairly impact small financial planning businesses.
One Interesting point, when upfront risk commissions dropped, isn’t it amazing that premium rates went up.. and surprise, surprise, the banks are now selling and getting out of insurance and advice businesses. Just looking forward to the fees dropping on these policies when commissions are banned… and I live in la la land too..
One positive though… at least I don’t need to worry about education costs as I will be throwing in the towel (along with many others I’d imagine).
Well done FPA and ASIC. For too long advisers have been collecting trail commission from clients they never see. Fair enough to receive remuneration for those clients you service, but for the others they should not been used as a “cash cow” for advisers. The financial planning industry must move with the times and charge clients for the service given …. and not have clients have their retirement benefit reduce because an adviser automatically receives trail without having to do anything. Advisers shouldn’t be afraid of “fee for service” …. this all helps build the relationship with clients who will understand the importance of paying for your service …. and it will change the perception of Australians that financial planners are just “salesmen”. Those advisers that complain about the loss of grandfathered commissions clearly don’t see the value of the service they provide to clients and are scared to explain their worth. Bring it on!
Perhaps the TPB can take a leaf out of the fee for no service book and refund subscriptions
See how the debate has now gone from the instutions to now bashing advisers. Just like FOFA and LIF, the little guy is the one that get’s screwed. Many of us would be very happy to move clients from commissions to fees BUT WE CAN’T DO IT because some product providers refuse to allow us to dial down commissions and replace with fees. eg. BT Wrap Essentials. If I try to roll my clients elsewhere, they cop massive CGT bills. So what am I supposed to do?
Massive CGT bills? Are you saying BT Wrap Essentials doesn’t allow in specie transfers out either?
BT Wrap Essentials will allow inspecie transfer only to their pension phase. If the built in commission is stripped out i would be charging the same fee to clients if its .44% build it in to your fee structure and is an opportunity to review the client and charge your actual fee for service as you should be reviewing anyway.
BT won’t ‘strip it out’, that’s the point. And there is no need for smart Alec comments about reviewing clients. As I said in my post, many of us would prefer fees, because we do review clients regularly and our clients see value in our service.
Any wrap product that doesn’t allow CGT free in-specie transfers out, is defeating much of the purpose in having a wrap. I believe AMP North also suffers from this weakness.
Ironic that a product called “Wrap Essentials” is missing one of the wrap essentials.
good points.. how many clients do you think you can service in a fee for service model… 100… 150… 200..?? No reference to the high advice costs that will inevitably follow… No reference to clients with smaller account balances that simply won’t be able to afford advice.. and what about mortgage trails.. do we stop that also.. I get a lot of service from a mortgage broker after the loan is established… right!? The point you ignore is at what point does an individual take responsibility.. are we telling them to stay in old products.. I thought that they could change at anytime.. the last time I checked we lived in Australia and not communist China. You need to get into the real world and stop trying to live in a ideological one.. perhaps ASIC, FPA, Choice can also come into the real world…
Completely agree. These Robin Hood advisers who overcharge the rich to provide “services” to the poor sound like socialist advisers. Provide a valued service, get a fee. The days of buying a book, collecting a trail and never seeing the client on a regular basis are numbered.
You do realise that eventally grandfathered commissions will be phased out by the fact of people moving their superannuation and/or retiring? I can tell you right now if it is changed and any of the ongoing commission clients call me after I stop getting paid to do their work I will not be taking their calls or helping them unless they agree to pay my ad-hoc fee of $330 per hour or part there of. Most of these clients are currently paying around $100 a year in trails so in the end the client loses because I have to make up the income somehow.
Thanks for nothing FPA.
No more $1100 pa to you each year. You are worse than useless!
Removing insurance commissions totally is your recommendation? Get Stuffed!!.
Sadly, the end of the insurance adviser in Australia is approaching very quickly.
But don’t worry clients, you can just go and get a lawyer to handle your claim and pay 30 or 40% of your claim amount for a valuable service I currently provide 8-10 clients a year for free.
but just remember that they fight for fair… right!?
I would think if you receive insurance commissions you’re not providing that service for free?
The ongoing insurance commissions I receive cover the cost of the following.
Ongoing advice and cover reviews, small top up covers where required, alterations to policies including reductions and cancellations, binding and non binding death benefit nominations, following up regarding missed payments and new credit cards and bank accounts to name just a few.
The ongoing commission doesn’t cover the 10 to 50 hours of time organising an ongoing IP or complicated claim sometimes over many months or years and ensuring that my client gets the full benefits from their policy.
It is disturbing how many times the insurance company assessor seems to know less about their own policy definitions than I do and god help a client who just gets sent to the insurance company and doesn’t have a quality experienced adviser in their corner.
Maybe in the future I will have to start charging for claims service if commissions keep reducing but I personally like to include this service without additional costs to a client at a time when they are generally doing it tough.
And the service from a mortgage broker is free too. It sounds exactly like your claims services is covered by the commission you receive, not free.
Maybe a poor choice of words. I should have said that my claims help is provided at no additional charge. Either way I don’t currently charge clients when I manage their claim. I also don’t charge clients when their insurance application is declined or when they need to reduce cover due to marriage break up / loss of job etc and there is a possible clawback.
good points.. the idiots at ASIC and CHOICE wouldn’t understand… remember you are conflicted by receiving these payments..
the client isn’t paying that directly ^^^ from the claim they need. Insurances companies will be better after they remove commissions they will all just start making more profit premiums wont come down.
FPA accepting bribery payments from instos ok, grandfathered commissions not ok. This bunch of crooked clowns need to shut up shop.
And the FPA represent their paying members best interest (and the best interest of their clients)????
Wow, it goes to show the what this association holds itself out to be but in reality what it really is.
An absolute disgrace.
Did the FPA ever think to consult its members about this . I have commission only clients and they know that they can ring me any time for free advice . Its a retainer , not a fee for no advice .
Retainer?! Pfff its a commission.
Yes it is a disgrace. Starting with finding out via the RC the conflicted state the FPA is in, from Dante saying “we’re an emerging profession” (thanks for standing up for your members), to Dante “being misquoted by saying clients shouldn’t pay more than $1,000 pa in fees or ask for a refund”, to the FPA saying get rid of pre-FOFA commissions. All this is a span of 3 weeks. Imagine how much damage they could do in a year!
Bye bye FPA. You’ll be getting my membership cancellation email on Monday along with all the other advisers under the AFSL.
They pushed clients into MY Super to stop fees and guess what, they left our name and contact details on the account so we can do their admin for free….. we received a call this morning from a mysuper client wanting to update their contact details…. this is outrageous…. we get screwed, the clients get screwed and the banks / super product manufacturers clean up…. wake up everyone….. this is disgusting and a joke!
Leave things alone and focus on client needs and outcomes not fees. It is not a sin to be paid a little for a lot of work. What has this country come too?
Is this a tactic from the FPA to turn the attention away from their puppet masters the CBA and AMP Financial Planning. I’m sure it will be used as distraction tool by the likes of AMP senior management. i.e it’s not us it’s those nasty planners again taking trailing commissions. Who will be the first to roll out the the fees versus commission arguments again from 1999 and shine the spotlight on individuals again for some personal gain. Plz…not.
The sheer arrogance of the FPA is shocking. They’re currently getting undisclosed and hidden payments (commissions/conflicted remuneration) from AMP Financial Planning/ Commonwealth Financial Planning etc etc and bundling them up (hiding them) and declaring them as members fees (deceptive) in their annual reports and they are the ones calling for commissions on grandfathered products to be removed! The lack of leadership for all these years in this area around the relationship of product and advice and now here we have the hypocrisy of the FPA in issuing this statement. it’s just disgusting and shocking. Just why renew member fees in June?
I am cancelling my FPA subscription on Monday. What a bunch of clowns.
Well said. The only people left in the FPA are AMP advisers. After all they get a 10% discount. We call call that conflicted remuneration or a volume based payment. I don’t see the Australian Medical Association given staff that work at Phizer a 10% discount do you?
No they just get a overseas holiday when they have sold X amount of Phizer, seriously the drug companies are worst than our industry…..
So am I.
How is this good for my clients? The bank will pocket my income and the clients would pay the same fees, but lose access to my advice? If I try to switch the clients over to another product, they will cop massive CGT bills. So I am basically forced to hand over these clients to the banks? What a disgrace!
This would only work if ALL product providers are forced to offer advisers the option of reducing the product fees in return for waiving the commissions, and this option would have to be available at the beginning of the 3 year transition period. Otherwise many honest, hardworking financial planning practices will be decimated by this and consumers will be ripped off and left without advice.
The grandfathered commissions and trails get switched off so neither you nor your AFSL get the money any longer. The financial product provider keeps the money.
What a disgrace? Your response is a disgrace. A rebate of trail goes to the client. I know because I’ve done it and it shows in their annual statements. Add an ASF to the product, no need to move it and trigger CGT. Granted some products may not have capability to add an ASF but the majority of grandfathered super and pension products will. Start on them first.
Well done FPA, why three years. They should get 12 months at the most, the gravy train has gone on for far to long.
My only sympathies to those that have recently purchased books on 3-4 times RR.
That’s business, adapt survive or leave!
Why don’t they turn off there own commissions now. The commissions they get from AMP Financial Planning via the professional partner program? The same commission they class as member fees.
Lanier, I have a fiduciary relationship with my clients since 2013. So whether I get a trailing commission of 0.60% from a product the client is in, due to preserving Centrelink status or I rebate the 0.6% and physically charge a fee of 0.60% or a dollar fee is now totally irrelevant. So it don’t matter no more.
FoFA was implemented in July 2013. This July it is 5 years old! Waiting another 3 years is ridiculous. Rebate trail from old products to 0 now and replace with an ASF if you have a relationship with your client that they are happy to pay for and opt into every 2 years.
If they were an existing client (pre 1 July 2013) a change in the ongoing fee arrangement doesn’t make them opt-in
What if you specifically list the various services you are going to provide going forward which differ from the previous “I’m there if you need me” for any admin queries?
I’m charging those clients a lower fee because I don’t have to send them opt in and FDS. If they are equal clients I’d get rid of them or increase there fees.
R U sure? You’re turning off the commission and rebating it, and then charging an adviser service fee (same amount) but different.
Some product providers will not allow you to do this. They are hoping commissions will be turned off so they can pocket the commissions and steal the clients of independent advisers. As I suspected, the RC is now playing into the hands of the product providers, just like FOFA and LIC. The banks and insurance companies would like nothing more than to see financial planning obliterated as a profession so they can deal with consumers directly and screw them blind.
no worries.. you are probably one of those people that work in a Govt job.. just cruising along. Don’t worry.. there won’t be an industry after all of this so you can join the queue in Centrelink..
the gravy train has just started.. look at the education providers circling for their next set of fees.. only problem, there won’t be any planners left and clients will pay through their nose for advice.. oh, and simple advice… won’t exist.. Why would you stay in this industry.. the only winners are the lawyers looking for the next legal case.. be careful what you wish for…