AFA rejects calls for mandated fee-for-service

Dennis Bateman

The Association of Financial Advisers (AFA) has joined this week’s fees versus commissions debate, rejecting calls for the abolition of commissions on financial advice and instead promoting choice and competition.

According to AFA president Dennis Bateman, mandating a single model of remuneration is “wrong”. Bateman said industry debate should instead focus on ensuring choice for Australian investors, whether choice of adviser, advice model, products or payment options.

AFA chief executive officer Richard Klipin also responded to the remarks of former Financial Planning Association chairman John Hewison made earlier this week.

“The one-size-fits-all model of fee-for-service and invoicing your clients is all well and good for certain segments of the marketplace, but a competitive market is all about providing options for consumers and not restricting choice,” Klipin said.

According to Klipin, the savings, superannuation and insurance ‘gaps’ in Australia would be “exacerbated by calls for a rigid fee-for-service model”, with the AFA chief implying that an industry-wide fee-for-service model would restrict access to “accessible, affordable quality advice”.

Bateman and Klipin argue that promoting effective fee disclosure, the provision of quality advice and improving the financial literacy of Australians should be the focus of the industry.