Haggling over the ultimate life/risk hybrid
All but a handful of major life/risk dealer groups have now abandoned high upfront commissions, moving to a hybrid model which some hope will form the basis of an industry position which can be taken to the Assistant Treasurer, Josh Frydenberg.
The latest group to publicly declare its move away from upfront commissions has been Fortnum Financial Advisers, following on from groups such as Centrepoint Alliance and Mortgage Choice leaving only a handful of organisations who have not formally declared a shift to a hybrid remuneration regime.
This is happening at the same time as the Association of Financial Advisers (AFA), the Financial Planning Association (FPA) and others seek to negotiate an outcome with the Financial Services Council capable of passing muster with the Government.
Money Management understands that at issue between the groupings is the balance of the hybrid remuneration model and the desire for the planning organisations to have the an agreed hybrid formula established as an interim landing point before the issue is reviewed again in five years' time.
The five year review period would be consistent with the review period established with respect to the Future of Financial Advice (FOFA) changes.
Asked to comment on the issue, AFA chief executive, Brad Fox, acknowledged that Fortnum Financial Advisers had been the latest organisation to announce its shift away from upfront commissions and that this was rapidly becoming the norm within the sector.
He said that, importantly, there was very close alignment between the advice associations on the key issues and that the move away from upfronts towards a hybrid model addressed the vast majority of the concerns first raised by the Australian Securities and Investments Commission (ASIC).
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