“The irony is advisers who are still getting trail commission – if the only ongoing fee they get is via that trail commission method through the product fee in this scenario – where’s the incentive for them to move to a fee-for-service model?”
Earlier posts have drawn attention to the parallel themes between RDR in the UK, and the FOFA in Australia – no doubt the regulators in both countries keep an eye on respective developments and policy approaches.
In this post, draft regulation released on grandfathering and conflicted remuneration in Australia last week, prompted a response that it may disadvantage advisers who have already moved to a fee-for-service model in line with the new FOFA regime.
Dante De Gori, general manager policy and government relations at the Financial Planning Association of Australia (FPA) said that while his organisation is seeking clarification, because product fees are excluded from a fee disclosure statement, trail commissions embedded in product fees would therefore be exempt, creating a disincentive to move early to a fee-for-service model.
“This is where it’s ironic,” De Gori said. “Advisers that have done the right thing and moved to a fee for service model – so basically, there’s no trail commission for the product and there’s a separate adviser fee charge, have to disclose.”
Source: Financial Standard. Read the full article here.
