Letter to my local member in relation to commissions

Hi David,

I hope you are well.

As you are my local member I thought you might be interested in this article and might be able to assist or put through to someone who is making the decisions for this.

If the government gets rid of all commissions and adviser fees and puts in place all the proposed changes, then Australia will see many financial planners will be leaving the industry as they won’t be making any money for their services. That means there could be up to 14,000 private advisers (not including the bank advisers) in our country looking for work, including their staff of lets say 2 per adviser of about 28,000. That’s a lot of people out of work if they have to close businesses.

Another point, Financial Planners will just have to charge an hourly rate for advice, my rate is $177/ hr, others are higher, so many consumers will not be able to afford the majority of financial planning services, and will do it themselves, pushing them into misinformed decisions.

Even with the governments My Super, as well as the industry funds and any retail fund, consumers still need to get advice from somewhere and they still have to pay for this advice. As it is not allowed to be provided due to Financial Planning laws by superannuation companies or industry funds.

I agree with the revamp of the financial planning industry to protect consumers, but what about financial planners, who is protecting them. Financial Planners spent many years and spend thousands of dollars studying to help others, they have small businesses, they support the local community, and they have loyal and supportive clients. What about the financial planner’s livelihood? A lot of advisers have moved to the adviser fee base, rather than the commission based system. However this is going to put a lot of strain on advisers and their businesses, with the proposed changes.

For example, I like may other advisers rebate all super and investment commissions and just charge an adviser fee, this is payable from the super fund to the adviser each month. These fees cover my costs, my emails, mail outs, reviews, appointments, seminars, my staff & their taxes and their super, education for clients, business expenses. If the government and the revamp committee have their way, and they push through a opt in and out adviser fee clause. It will be a huge problem. This clause means that each client will have to sign a new form each year to say yes they want a fee and assistance. What happens when clients decide they don’t want to pay but want the services? Who pays then? The government? I don’t think so.

I know you’re not the person to have a whine to, but I would appreciate if you can escalate this email to others who are not in my industry but are making decisions for me.

Maybe if instead of the Government and the Committee pushing the Cooper and Henry report and the government supporting everything in it, maybe they can look at the big picture and explain to consumers what these changes mean and why. Financial planners have a hard enough time dealing with the controversy the Industry funds put out there, and now we have this to explain and decipher.

One thought I have is, the Government employees – PM’s, MP’s, Party people (Lib & Lab), etc have a great superannuation benefits, and have large pensions and yes they may pay for some advice, so why are they being more supportive of UNION Based INDUSTRY funds, and Changes to financial advice and not being supportive of retail funds or Financial Planners.

AS FOR THE ARTICLE:

You will all find this article prepared by Zurich very interesting reading and puts an alternate view to the many being espoused by certain associations, vested interests, union controlled industry super funds and media commentators.

There is absolutely no doubt in my mind that you would get the same result about financial planning and investment consumers if the questions were put to them in the same unbiased way.

The problem we face is our destiny is being shaped by non advisers and people who do not actually work in our business and with our clients on a day to day basis. Consumers want commissions so what is driving the pressure for change.

Loss of a commission option for consumers is a loss of their given democratic right and the loss off or restriction on choice always means they will pay a higher cost. Pity that doesn’t seem to mean anything to some people who are not directly impacted.

Regards Tarnia