PIS commits to removal of commissions

Professional Investment Services (PIS) has joined the growing list of dealer groups that have committed to remove commission payments made from product providers to financial advisers.

PIS group general manager for advice Stephen Poole said while the group was not “anti-commissions”, it acknowledged the need to address the new world order. Poole said the group believed clients should be given a choice about how they pay for advice. In PIS’ view, fee-for-service includes being invoiced outside the product as well as being charged a product or asset-based fee, with the proviso that the fee is negotiated with the client (rather than the product provider) and can be terminated by the client.

Poole said he anticipated a 12-24 month implementation period for the group’s transition to fee-for-service. PIS, as a principal member of the Financial Planning Association (FPA), will need to ensure its authorised representatives have this new model of remuneration in place by July 2012.

Poole said the decision had been communicated to the group’s advisers earlier this year. PIS group chief executive Robbie Bennetts sought to reassure advisers while discussing the remuneration transition at the group’s annual conference last week.

“Your businesses will not suffer. We will support you through it and get you in the right position,” Bennetts said.

A number of large-scale financial planning groups have publicly committed to embracing the new remuneration model set down by the FPA in May 2009.

AMP Financial Planning and AMP-owned Hillross are on track to meet a transition deadline of July 1 this year. National Australia Bank subsidiary Godfrey Pembroke yesterday broke new ground by announcing it would remove commissions for all new clients seeking insurance and mortgage advice, in addition to its previously existing position for incoming superannuation and investment funds.

The FPA recently indicated its position on commissions did not extend to insurance products.

Update: Poole confirmed the group's transition to fee-for-service would not apply to insurance products. He said while there were a number of PIS advisers who were interested in charging a fee rather than receiving a product-based commission for insurance advice, this number was very small.

Poole said PIS would support those advisers in making that transition, while noting the majority would continue to receive insurance commissions. Poole argued that the introduction of fees to the insurance landscape would make obtaining insurance more expensive and exacerbate the existing level of underinsurance in Australia.