IFSA moves on commissions
The chief executive of the Investment and Financial Services Association (IFSA) has confirmed the industry body will begin phasing out commission payments from next year.
IFSA chief executive Richard Gilbert told Money Management the industry body will today release a new superannuation charter that will see its members move into a new set of arrangements in which there will be a structural separation between investment product fees and advice.
“We’ll be moving into a new set of arrangements to restructure fees and advice,” Gilbert said.
"The main point of the charter is to once and for all clear up the issues around advice and the payment for advice in the superannuation product," Gilbert said.
Gilbert said while the charter is currently only a draft document, "We expect it will be accepted by our members".
The outgoing IFSA chief said the industry body had been in broad consultation with its membership.
"It will roll out in the middle of next year and have a phase in [period], but clearly people who want to be at the competitive edge will roll this out," Gilbert said.
He acknowledged that the landmark move would represent a significant cost to many of IFSA's members, requiring many to substantially overhaul their existing systems.
But this is a move Gilbert said is for the benefit of investors.
It's also one that places control over fees firmly into the hands of financial planners. Gilbert said the setting of fees will now depend on negotiations between financial planners and their clients. He also said he rejects "outright any call for the removal of asset-based fees".
"Clearly the tax advantages of paying for your advice in super out of the product are unequivocally good."
Any call for the removal of asset-based fees is "economic stupidity", Gilbert said.
The difference between asset-based fees and commissions, which are also based on a percentage of a client's investments, is the fact that the former are directed by the client, while the latter are directed by product providers.
This is also the basis of the Financial Planning Association's recommendations to members on remodelling remuneration payments.
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