Adviser feedback 16/09/1999

“How deeply entrenched are soft dollar commissions in the financial services industry?”

"As far as my business goes they are not entrenched at all, but in the industry at large there is still quite a bit of it going on. Whether it be from a product manufacturer denoted as a marketing allowance, I don't know, but from my understanding it does go on.

I don't have an issue with soft dollar commissions as long as there is disclosure.

I'm sure that there are benefits to it. If I was offered an allowance to promote more of the company it would be fine, just as long as it was disclosed to the client."

Rory Mooney

Financial Planner

Lend Lease Financial Planning

South Australia

"I can only speak from a financial planner perspective. But from my observations there are very few financial planners that would consider a soft dollar commission.

I think that soft dollar commissions pertain more to the insurance side rather than the financial planning side. The insurance companies tend to offer those kind of soft dollar commissions more than fund managers.

Being a regional planner, I think that all of the city planners get more perks like regular lunches, tickets to sporting events, shows and entertainment that you would only see in the city. We don't see a lot of that.

In our case, fund managers provide speakers for our seminars.

But I do think there is a difference in the country and the city and I think that the country advisers do miss out on the soft dollar commissions. Except for overseas conventions. Now what we do depends on our production level. We do qualify on average every two years."

Philip Micheal CFP

Philip Michael and Associates

Lend Lease Financial planning

Queensland

"I really don't believe there is an enormous amount on the investment side of the business overall. I believe they are being fazed out as the compliance becomes more difficult and I believe rightly so.

I think that the difficulties with soft dollar commissions is defining exactly what they are and therefore I believe that groups like the FPA have a strong role in basically interpreting and communicating a definition with their members.

For example if there is dealer group that is also a product distributor and have planners that are actually on the payroll of the dealership how do you actually define soft dollar commissions for them? I'd say that in a situation like that it would be very difficult.

In the UK, situation there is a very strong disclosure of soft dollar commissions, a lot stronger than here in Australia."

Ken Bloomfield CFP

Director

Altcorp Financial

NSW

"I think that the old soft dollar arrangements not longer exist in the junkets like they use to. We pay to attend our own conferences, with strong businesses in each of them.

I genuinely believe that we get something out of it. So much so that we forgo brokerage so that each adviser in our firm can qualify. We take six or seven per cent brokerage so that every adviser has an opportunity to go away.

The social side is wonderful but it is important to us that we have disclosure to our clients, clarifying to them that we may be eligible for various benefits from fund managers who place funds with us.

I believe that the problem is nothing like it use to be, conference are still vitally important as it gives us chances to sit down with people at our own level and learn. It is mutually beneficial. Yes the social side is enjoyable but the business side outweighs the social."

Ian Tonkinson CFP

Group manager

Gow-gates Financial services

NSW