Many fee-for-service planners not true to label

Many advisers may be incorrectly presenting themselves as fee-for-service financial planners when they are also charging commissions, according to a rebate service provider.

Paul Brady, director of YourShare Financial Services, said in a submission to the Parliamentary Joint Committee on corporations and financial services that many planners are often charging both commissions and fees. He further noted the absence of a database of pure fee-for-service financial planners.

“Indeed we have found that because there is no independent verification, many planners hold themselves out as fee-for-service financial planners when in reality they are often a hybrid of the two,” Brady said.

“That means they charge clients a combination of commissions and fee for service, and thus further muddying the waters around what exactly consumers are paying for.”

The company called for the Australian Securities and Investments Commission (ASIC) to develop a criteria and database of “purely fee-for-service” planners, to be audited annually and be made available to investors.

“It would represent an interim measure for the protection of investors whilst further debate is underway about the broader implications of remuneration structures of financial advisers.”

YourShare, which does not provide financial advice, tracks down fees and commissions levied on clients’ financial products, acting as nominated brokers to reduce fees and commissions to zero, collect trailing fees and refund the majority to the client.