Pandora's remains
By
Julia Newbould
Mon 14 Jul 2008
When Pandora opened her mythical box, she released all the evils of mankind - disease, despair, malice, greed, old age, death, hatred, violence, cruelty and war - leaving only hope inside.
When Pandora opened her mythical box, she released all the evils of mankind - disease, despair, malice, greed, old age, death, hatred, violence, cruelty and war - leaving only hope inside.
In the same vein, by airing former FPA chairman John Hewison's views on fees and commissions on InvestorDaily last week, we opened the great debate once again for the financial planning community.
It's a never-ending argument. Transparency is the claim by both sides of the debate. Those who want fees believe there is no transparency without them, and those who prefer commissions believe that as long as there is transparency there is no problem.
I don't believe the argument is resolvable just yet.
The issue is never really one of fees versus commissions, it is conflicts of interest. This is a much bigger issue for industry and one that remains pertinent.
The argument ties in closely with platforms. It is the platforms that allow dealer groups a source of profitability, and pay for the many dealer services they need to attract advisers to their networks.
The deals struck with fund managers muddy the waters as to what is independent advice.
And this is an industry that trades on perceptions. Whether or not advice is unbiased is secondary to whether it looks unbiased.
There is also the situation of dealer groups and advisers being owned by fund managers. Many clients don't understand the relationships between an adviser's business and the adviser's licensee, which is not a terrible thing if they are actually clients.
But the majority of Australians who aren't clients of financial planners may be put off by the perceived conflicts.
It's food for thought. Let's focus on the remains of Pandora's box and assume the constant opening of the box will continue to show us hope that we will eventually resolve the issues at hand.
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