On Monday, NAB announced it would be switching off grandfathered commissions paid by NAB Wealth superannuation and investment product providers to NAB Financial Planning and NAB Direct Advice advisers.
The move follows similar actions taken by both BT and Macquarie earlier in the year.
Responding to questions from ifa, a NAB spokesperson confirmed clients will be the beneficiaries of the recent decision.
“By NAB foregoing commissions from its superannuation and investment product providers, around 32,000 superannuation and investment customers will benefit through fee rebates and reductions, totalling approximately $11 million, with effect from January 2019,” the spokesperson said.
Earlier in the year, the royal commission heard from both ASIC and the FPA that grandfathered commissions should be removed from the industry, however both the AIOFP and the AFA have defended the commissions and their role within the industry.
Forte Asset Solutions managing director Steven Prendeville previously told ifa that grandfathered revenue streams are “absolutely at risk” and that this is already reducing practice valuations.
I think a few here are confused. Give up trying to argue you provide a service for your commission. The gov’t, the RC, product providers, platform providers don’t care if you the adviser is providing a service for the commission. The general view is that commissions be turned off. If you are providing a service then you should have no problem convincing your client to pay a fee for that service. And as for any transition period. Please. FoFA came into effect 5 years ago. that is five annual reviews to change the payment structure.
Well said!
“…with effect from January 2019” Ha! What’s the bet that there is an admin error and these don’t get rebated until June 2019. Why not switch them off now and pay back commissions retrospectively where no service was provided?
They stopped paying NAB FP advisers these commissions in 2015. The only difference now is they say they will rebate… what a bunch of liars.
It is a shame that NAB has not consulted the successful financial advisers that have supported the MLC group for decades. I am one of them. Our mantra is show clients you care don’t tell them. A simple concept but profound in its application. And secondly the fact that AMP,MLC and other institutions collected trail commissions for no service does not mean that all trail commissions are paid for no service. Quite the opposite in fact. The trailing commission was a payment set up from the outset to support the running costs of financial planning practises in recognition that they are not paid a wage by NAB/MLC to service the clients invested in their manager of manager investment service. While it is understandable that NAB would turn off trailing commissions to their employed planners if they feel they were not providing service to these clients it is disappointing that NAB would support stopping all grandfathered commissions without giving consideration for the service many advisers do provide ( and is the cornerstone of their business success ) and the adverse implications for Centrelink clients and CGT implications if a client moves out of one super fund into another. Many clients have been unable to move out of the trailing commission products into the fee for service products that MLC introduced in recent years so they should be cognisant of these implications. Surely a more considered response was required than a PR response to try and win back community support. Show advisers/clients you care NAB. Don’t tell them.
[i]”The trailing commission was a payment set up from the outset to support the running costs of financial planning practices in recognition that they are not paid a wage by NAB/MLC to service the clients invested in their manager of manager investment service. “[/i]
Twoddle
But the real question is whether they will allow independent advisers to transfer away from commissions. BT through their Wrap essentials products WILL NOT allow advisers to dial down or rebate the commissions to clients. Which leaves advisers in a perilous position. Clients will be disadvantaged if they move to other products due to CGT & Centrelink grandfathering. It seems to me some of these product providers are positioning themselves to a wholesale take-over of independent adviser client bases if commissions are ceased. They will keep the higher fee and provide service in-house. This is a big story. Please ask the hard questions IFA.
Commissions for NO service NAB – well of course they should be turned off and the clients get lower fees.
Commissions FOR Service – should be kept and the same FDS and Opt In rules should apply as does to Fees for Service. FoFA was stupid to not have done this in the first place.