Financial advisers should move beyond the current Future of Financial Advice (FOFA) debate, accept that commissions are a thing of the past and be satisfied with a fee for service arrangement, according to Adelaide-based financial planning business consultant, Max Franchitto.
Commenting on adverse planner reaction to the Senate's disallowance of the Government's FOFA regulatory changes, Franchitto said he was surprised at the number of people who were taking a doom and gloom approach in circumstances where many advisers he was meeting were happy with fee for service.
"It is time to move on and just focus on building a sustainable business to give good strong , reliable professional advice to consumers, and get paid for the value one gives with that advice," he said.
Franchitto said he believed commissions were "a thing of the past like the fax machine and the horse and cart".
"If you are a true advisor in any professional service you should be remunerated by the recipient of your advice on the ‘value balance' of that advice, not by the product producer – grandfathering is an accurate name for this old fashioned redundant business model -really let's move on and let's not pretend that the customer will suffer," he said.
Franchitto said that regardless of what was said about fee for service 80 per cent of Australians were still under-insured – a statistic he was taught at AMP in the 1980s.
"I met a businessman the other day that has had his life cover moved five times by his advisor, it was straight life cover, how many different ways can one interpret dead? So that had nothing to do with the commission I bet?" he said.
