Phil Anderson, the AFA’s general manager of policy and professionalism, made the comments at the annual AFA conference held at the Gold Coast.
“There is no way that we can expect to totally remove all conflict from financial advice,” he said.
“What is important is that we have the right practices, the right policies, the right culture to ensure that we manage conflict to ensure that clients get the best possible outcome.”
Mr Anderson said that various remuneration models all presented potential conflicts and avoidance of them was unrealistic.
“An hourly based fee gives you an incentive to over-service. A flat fee may give you an incentive not to provide all the services you had originally intended to do,” he said.
Mr Anderson conceded that the industry was going to have to make changes due to the royal commission, but also said he would not support the removal of all commissions.
“We certainly won’t be arguing for the removal of life insurance commissions because without that it would have a significantly detrimental impact on making sure that Australians get access to the insurance they need and that is one thing that we certainly can’t allow to happen,” he said.
Mr Anderson said that it was easy to get overwhelmed by the changes coming to the industry because of the royal commission, but it isn’t as bad as people think.
“We do need to be careful that we don’t get overwhelmed by it [the royal commission] because we are living it day to day,” he said.
“It’s important for us to have those conversations with clients, to confront it, to allow them to speak to their concerns. We’re going to have to work through this but it’s not as bad as we fear that it might be.”
AFA bribery payments from the FSC members who bribed the AFA to go along with the LIF = CONFLICT OF INTEREST
Okay, so basically you want small business financial planners that use a large licensee to shut down Dover style?
Dover 2.0
It would be much better if all the small businesses got their own licence and the large licensees just faded away through lack of interest. May happen sooner than we think.
Exactly Phil. All payment methods in nearly all service industries are conflicted.
It’s outrageous that IFAAA members can advertise themselves as “conflict free”, whereas advisers with no product provider control can’t advertise themselves as “independent” if they choose to give clients the option to pay by commissions.
I think IFAAA members advertise themselves as conflict free because [b]THEY ARE[/b]!!!!
Are you saying they don’t get paid? Because that’s the only way they can be conflict free.
Fee for service is a conflicted payment method. It encourages the provision of complex/additional services that may not be necessary. It is the same conflict that doctors and lawyers face.
Sure, some IFAAA members may do the right thing by clients and manage that conflict well. But so do thousands of non IFAAA advisers. Managing a conflict is not the same as removing it. It is misleading and deceptive for anyone who provides fee for service advice to market themselves as providing conflict free advice.
[b]Get rid of Vertical Integration and we will get rid of most of the significant Conflicts of Interest.[/b]