Advisers reject fee-for-service
Despite heavy criticism of advisers over conflicts of interest, the vast majority do not believe the financial planning industry should abandon commission-based remuneration in favour of a fee-for-service.
New research has shown that almost 60 per cent of advisers do not believe moving to an industry wide fee-for-service structure, which some consumer groups have claimed would rid financial planning of conflicts, would be appropriate.
Additionally, fewer than 40 per cent of the 715 respondents to the survey, conducted by market research company Brandmanagement, expected the wide scale move to fee-for-service would ever happen, whether they liked it or not.
The findings come as the Financial Planning Association (FPA) enters the final stage of its crusade against conflicts of interest in the financial advice industry, with a consultation paper on new principles to manage conflicts open for discussion until October 28, 2005.
The FPA principles do not ban commission payments, but make it clear that all remuneration structures have to be adequately disclosed.
However, the apparently high-profile nature of the conflicts debate appears to have passed by some advisers’ attention, with more than 36 per cent of respondents to the Brandmanagement survey indicating that they did not know whether their dealer group had rebate arrangements with the platforms that they allocated their clients’ funds to.
Of those advisers who were aware of rebate relationships, almost two-thirds thought the rebate should go towards lower fees to consumers.
The survey findings drew a mixed response from advisers and dealer groups contacted by Money Management.
Retireinvest general manager George Haramis said advisers would benefit from using purely fee-for-service models, but did not expect them to be adopted across the board.
“You’ve got too many people who have vested interests and avoid speaking to the client up-front about what they’re charging, and why they’re charging it,” he said.
Phillips Dean Brickwood adviser Brenton Tong said he expected fee-for-service models to become more common in future as consumers’ understanding of financial advice improved and they became more prepared to pay for financial advice.
“But that could be quite some distance away,” he said.
Recommended for you
Financial Services Minister, Stephen Jones, has assured the cost and time to enter the financial advice profession will soon be halved, as shadow treasurer Angus Taylor pledges to reach 30,000 advisers.
The positive results of the latest financial adviser exam have helped the advice profession reach 15,600 yet again, according to Wealth Data analysis.
Financial advice firms have told Adviser Ratings they are planning to increase their compliance spend by almost a third, including on enhancements to their cyber security which ASIC has identified as an enforcement priority.
The digital advice platform is officially launching into the financial advice sector, offering up its services to practices as a means of engaging with the next generation of clients.
