The business announced yesterday that it will stop receiving grandfathered commissions as part of a strategic move to improve client experience.
“The decision to discontinue grandfathered product commissions is part of our continued business transformation and in order to further increase transparency and demonstrate value to our clients,” a Macquarie Group spokesperson said.
The change will see all grandfathered commissions paid to Macquarie Private Wealth and Macquarie Private Bank advisers (affecting more than 17,000 client accounts) switched off from 1 April 2019.
“For independent financial advisers currently receiving grandfathered payments through our wealth third party channels, this has no impact on those arrangements, which will continue,” the spokesperson added.
The decision follows similar changes made by BT in June, which saw the removal of grandfathered commission payments to salaried advisers working through Westpac, St George, Bank of Melbourne and BankSA.
“Five years on [from FOFA], more than 140,000 BT Advised customer accounts are still subject to these grandfathered payments,” BT said at the time.
“We have considered this position from both a customer and a stakeholder perspective and decided that it is the right time to draw a line under these past arrangements and eliminate them as far as we are contractually able.”
So that’s most of the big instos now having “seen” to do the right thing.
Just like NAB FP (who led the way with this a while back) they are just screwing over their planners as easy targets.
This has nothing to do with providing any benefit to clients. This is about seeming to do the right thing and save some bucks on bonuses paid to planners. Exactly what BT and NAB have already done.
Just like BT they are not confirming that these will be rebated to customers? Can IFA ask for this clarity? No doubt salaried advisers will also see a pay or bonus rise to compensate unlike their self employed counterparts.
Congratulations to Macquarie.. like BT, the new moral guardians to our industry. Perhaps the headline should read…
“Macquarie to remove grandfathered commissions… and rebate these commissions to their clients”
Only at that point I might actually believe the new moral compass that these big.. money hungry.. profit seeking conglomerates have discovered.
Let’s not get the spin machine in the way in the meantime.. great news… hopefully for the end consumer?!
This is a Distraction. These firms are doing this as a means of avoiding questions and just to be shown as doing something. Turning off in-house & internal commissions is just a round robbin series of payments that ultimately come back to them anyway. It a zero sum game for these guys. Net impact for them is ZIP. Share price unchanged.
The best way forward is for these firms to leave the advice industry full stop. The royal commission knows it and Macquarie knows it and for Macquarie that would be a disaster. We should not think that Macquarie is somehow acting in the best interest of clients or leading the way here.
I don’t have a problem with them turning off commissions for internal adviser, but are they rebating the commission to the client, or simply retaining the income themselves? If so what service are they providing for the additional fees they are now retaining. After all the commission was merely a manner of collecting income for the adviser doing the work. If we are going to have commissions turned off then all provider’s, risk, investments and super must allow advisers to charge a fee (client consent of course).
sounds like the supermarkets charging for plastic bags.. just bottom line profit to me
They are passing it on to the client like BT are going to. They are doing the right thing (for once).
…and it’s started…that’s how we make us look good and the independent advisers look bad. While you’re there, why don’t you turn off ongoing insurance commissions also? That should improve the client experience also wouldn’t it? Oh…wait. Macquarie have sold off the risk business already so sales won’t be impacted. That’s Zurich’s potential problem now.
Great result for Macquarie clients as no doubt all those accounts will now have reduced fees??
ASIC should check all those 17000 accounts receive every cent of benefit that Macquarie recoup or it would just be a ‘me too’ money grab like to grubs at Westpac?
It is interesting that BT and Macquarie both concluded that stopping the payment of the commissions was in the best interest of the client. We can conclude from that they were not providing any service to these clients. This assumption does not necessarily apply to advisers that are not employees of BT and Macquarie and it is dangerous to see the BT and Macquarie actions as leading the way forward. The purpose of the trailing commissions was a servicing commission to recognise the service advisers provide. The big institutions offer a bureaucratic service based on account numbers whereas advisers provide the personalised service. Also the big institutions have not structured their employed advisers to provide ongoing service ( ie limited support staff and up front sales incentives ). They do not represent the advice industry and the best way forward is for them to get out of the advice space.
But most advisers don’t provide the service. If they provide a service, the client would have no problem paying a fee instead. Easy switch!
“The purpose of the trailing commissions was a servicing commission to recognise the service advisers provide.” No, it wasn’t! Never was.
A commission by definition is an incentive paid by a product manufacturer to an intermediary to sell their product to an end user, and/or to retain the end user in the product to the benefit of the product manufacturer. Product manufacturers don’t give a toss about whether you service your client base, they just care about the client going elsewhere.
Absolutely spot on!
Lol exactly. Pretty clear to see how some advisers try to justify commissions and hang onto the ‘good old days’ of product flogging.
A commission is a product provider paying you to sell something for them. No other way to put it.
It is pretty clear that you don’t understand the ongoing advice and service advisers provide clients invested in platforms.
Of course, we do! What you seem to fail to understand is that a trailing commission is not, and will never be, a payment for those services.
If you actually provide ongoing advice and service them, you can and will just charge a fee. Problem solved!
Unless you, like most, dont actually service these clients outside of ‘offering a review’ they never take up and sending a newsletter.
I don’t know what pills you’re on Reality, but I’m actually arguing against trailing commissions. My clients pay an ongoing service fee for the ongoing services I provide.
If you have a problem, target those above who are trying to perpetuate commissions by claiming they are a defacto ongoing service fee. Until the client controls when and how you, and for how long you get paid, then the service will always be a second thought for them.
Except that Life Companies don’t magically complete the paperwork for a claim, ergo services are being provided and outsourced on behalf of the insurer to an adviser. I hate investment comms with a passion, I’m not a risk writer but my colleagues are and I feel/fear for them if they have their revenue pulled too.
So who made you the judge and juror on the purpose of the trailing commission and the definition of commission ? It is not the role of the product manufacturer to provide ongoing advice and service. That is the advisers responsibility and role. Advisers chose the investment platform for their clients. Since trailing commissions were removed for new investors advisers have been charging fees for their ongoing advice and service that replaced the trailing commission. So if the trailing commission was an inducement to sell a product why have advisers continued to recommend the same products and replace the trailing commission with advice fees ?