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Open letter to Scott Morrison :
Advisers oppose FPA, ASIC on grandfathering

Advisers oppose FPA, ASIC on grandfathering

A majority of financial advisers are against the FPA and ASIC’s recommendation to the royal commission that grandfathered trailing commissions be switched off, according to new research.

A survey of 500 advisers conducted by financial services M&A firm Radar Results found that 76.4 per cent disagreed with the recommendation made by both ASIC and the FPA to the royal commission that grandfathered commissions be removed.

Radar Results principal John Birt said the results “demonstrate the concern financial planners have for a proposed ban on commissions”, adding that some advisers derive as much as 50 per cent of their recurring revenue from these commissions.

“Interestingly, 202 of the responses included a written comment, many not very happy with this proposed ban,” Mr Birt said.

A number of the respondents remarked that removing commissions will offer little to no benefit to clients and will instead contribute to product providers’ bottom line.

“Banning grandfathered commissions does nothing for the public unless the admin fees drop by the equivalent amount. All it does is line the pockets of the product provider. Commissions are not adviser service fees where the client benefits from them being turned off,” one respondent wrote.

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“Many clients are in old product that has commissions built in (some for good reason). If they remove their adviser now they do NOT benefit with a reduced admin fee.”

from the web

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