Researchers call for cut in agribusiness commissions

Some of the country’s most influential agribusiness researchers have united to call for a significant reduction in the commissions paid to financial advisers who recommend agribusiness products.

Speaking at the Resnik Communications Advanced Tax Strategies Conference in Sydney yesterday, researchers from PIR,Lonsecand the Australian Agribusiness Group said the current range of commissions paid to advisers for agribusiness products are too high.

Currently, the commissions on agribusiness products range from 5.25 per cent to up to 25 per cent, a much higher rate of commission than that paid by most managed funds.

PIR joint head of agribusiness research Tim Bennett says a commission level of between 5 to 7 per cent is more reasonable and is confident that commissions will come down in the future as the agribusiness market matures.

“As agribusiness products look less tax effective and more like managed funds, the cost will come down,” he says.

Further, a lower commission level would begin to reflect the lower risk now associated with many agribusiness products.

However, the group of researchers confirmed the importance of research in the agribusiness industry to help investors and planners identify which investments are less riskier than others.

“There are plenty of products inherently more riskier than others, so getting reliable information is important,” Bennett says.

The group said management risk, growth risk, market risk and commercial risk must all be calculated by researchers in providing such information.

The researchers warned commercial risk is a major concern, particularly the type of information supplied to investors in prospectuses.

“There is a very wide variance between promoters in how risk is dealt with,” Lonsec consultant Rob McGregor says.