Industry funds bang commissions drum
The Industry Super Network is claiming that over the three years to June, 2007, around $2.3 billion has been paid in sales commissions on Super Guarantee contributions and a further $2.7 billion was paid on voluntary contributions.
A spokesman for the Industry Super Network, David Whitely, said these figures had resulted from research commissioned by his organisation and laid the blame at the commission system being utilised in the financial planning industry.
“The payment of sales commissions to financial advisers out of compulsory contributions seems morally wrong and detrimental to retirement savings of many Australians,” Whitely said.
“Commissions are often seen as rewards for enticing sales that might not otherwise have occurred, but under the law employers are required to contribute 9 per cent of their employees’ salary to the superannuation funds of those employees,” he said. “In effect, many employees are paying a sales commission on wages that they are required to put aside for their retirement.”
He said that research conducted by independent research agency Rainmaker estimated that sales commissions on compulsory Superannuation Guarantee payments amounted to $742 million in 2005, $815 million in 2006 and $765 million in 2007.
“Commissions are levied for ongoing financial advice, but the value of such advice is unclear,” Whitely said.
“This is an area requiring further investigation, but it does appear that many employees are not even aware that they are paying commissions out of their compulsory contributions,” he said.
AUTHOR
Mike Taylor
Recommended for you
ASIC has cancelled the AFSL of a Perth financial services firm following payments to its clients by the Compensation Scheme of Last Resort after a failed managed investment scheme.
Bravura chief executive Andrew Russell has announced he will be stepping down from the company, just under two years after his appointment.
Financial advice businesses with a younger, wealthier client base are enjoying higher valuations and increased attention from potential buyers than those with older clients.
A financial advice firm has been penalised $11 million in the Federal Court for providing ‘cookie cutter advice’ to its clients and breaching conflicted remuneration rules.
