A commission by any other name
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The financial planning industry has been warned that the industry superannuation funds campaign against commission-based remuneration will not be ended if planning groups simply seek to change the terminology and switch to asset-based fees.
The point was driven home during a round table conducted during last week’s Conference of Major Superannuation Funds by Money Management’s sister publication, Super Review, where the chief executive of the Australian Institute of Superannuation Trustees, Fiona Reynolds, said that if a ‘commission’ simply became something else, the problem would continue to exist.
“If it just becomes something an adviser gets paid for in some other way, then we haven’t gotten away from the problem,” she said.
Reynolds told the round table that she had become concerned about what was likely to happen after attending a conference at which financial planners had expressed their confidence about a continuation of asset-based fees and volume rebates.
She said that planners seemed to believe the Government would not be prepared to act against them.
“Is it gone in name only? That is the question,” her colleague, AIST policy and research manager Andrew Barr, said.
Mercer worldwide partner Russell Mason said he believed that the ultimate answer lay with the Government legislating on the issue of remuneration related to superannuation guarantee monies.
“I think there still needs to be legislation that says superannuation guarantee contributions cannot be used to pay commissions, volume bonuses or any other remuneration to a third party other than by fee-for-service. Otherwise, there will always be those who do not abide by industry guidelines,” he said.
The chair of the Superannuation Complaints Tribunal, Jocelyn Furlan, pointed out that while there was full advice and intra-fund advice, she was concerned there remained a grey area for super fund members.
“The two questions that cause all the regulatory headaches are: ‘Should I pay off a mortgage or salary sacrifice into super?’ And, ‘What kind of insurance should I have?’,” she said.
“It is a little area where people are looking for guidance but it is this area that gets them into trouble.”
Reynolds had earlier told the round table that she believed that while a good deal of advice could be
provided within the superannuation funds framework, there remained an ongoing role for financial
planning.
“I think a lot of funds are moving to be able to give very simple advice to members — intra-fund advice — but there is still going to be a need for financial planners because you can’t think about your retirement only in terms of superannuation,” she said.
“You need to think about it more holistically than that. So there is still a need for financial planners and that is why we want to see things happen with commissions and trails,” Reynolds said.
AUTHOR
Mike Taylor
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