Commissions ban may boost planner interest in LICs
If the shift to a fee-for-service model does come into play next year as part of the Government’s Future of Financial Advice (FOFA) reforms, it is expected that listed investment companies (LICs) will reap the benefits.
Research analyst at Bell Potter William Spraggett said the change in legislation would put LICs on the radar.
This is mainly due to the fact that the new model will mean financial planners are paid just as much for recommending LICs as they are for more expensive managed funds.
In turn, this could see discounts between the share price of LICs and their net tangible assets (NTA) narrow as more money pours into the sector, and it is expected that advisers and their clients will follow suit.
“I think they will tear away in the new environment,” Spraggett said.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
