The scrapping of financial planning commissions all but set in stone
Since there is bipartisan support for the removal of commissions from planner remuneration, the outcome of a Federal Election will not change the fact that commissions are on the way out, writes Mike Taylor.
The Cooper Review is complete and, if we are to believe the Minister for Financial Services, Chris Bowen, the Federal Government would like to use its recommendations to put the final touches to Australia’s new superannuation regime.
According to Bowen, the Cooper Review represented the final part of a three-piece strategy, of which the first part was the interpretation of the Ripoll Inquiry findings into the Future of Financial Planning initiatives and the second part was the Henry Tax Review.
However, the Government’s major take-out from the Henry Tax Review was the Resource Super Profits Tax (RSPT), which, in turn, was going to be used to help fund reductions in company tax and the increase in the superannuation guarantee to 12 per cent.
At the time of writing, the Government was locked in negotiations with the mining industry to find some common ground on the RSPT, and a succession of ministers, including the Treasurer, Wayne Swan, had acknowledged that the rise in the superannuation guarantee and the company tax cuts might prove to be the first casualties.
Irrespective of the future of the RSPT, the financial planning industry already broadly knows its future under a Labor Government.
That future has been outlined in the Future of Financial Planning initiatives and reinforced by the Cooper Review’s recommendations with respect to banning commissions and delinking products from advice.
Cooper, however, goes a step further by seeking to impose an even more prescriptive approach to default funds via its MySuper proposals.
While the Government has made much ado about its proposed changes to superannuation and financial planning, those changes will not be a major issue at the forthcoming Federal Election.
There are no votes in trying to explain the complexities of planner remuneration, and even fewer votes in talking about abortive proposals to lift the superannuation guarantee.
Until the polls close on election night and the outcome is known, the financial planning industry would be best advised continuing to work towards a remuneration model without commissions.
While the Coalition has proved more sympathetic to advisers, both parties agree on the need to delink products from advice.
AUTHOR
Mike Taylor
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