AFA holds firm over commissions

Competitive market is providing options for consumers

Kate Kachor

Fri 04 Jul 2008

The Association of Financial Advisers (AFA) has weighed into the debate over adviser remuneration, with the association determined to hold the line against the banning of commissions.

"The one size fits all model of 'fee-for-service and invoicing your clients' is all well and good for certain segments of the market place, but a competitive market is all about providing options for consumers and not restricting choice," AFA chief executive Richard Klipin said.

"The AFA is all about building professionalism and not getting caught up in how advisers charge. It is backward looking to keep talking about a lack of transparency when we have had several years of building transparency in the system.

"The focus of the debate needs to be on value of advice not how we charge."

The AFA's comments are in response to suggestions by former FPA chair John Hewison that adviser commissions should be banned.

"Mandating a single model of remuneration is wrong and it distracts everyone from the main purpose of working with advisers:  which is building, protecting and managing wealth for Australians," AFA national president Dennis Bateman said.

"Australians need assistance from professionals in many areas of their lives and those professionals disclose the costs and forms of payment that they will receive. It doesn't matter if you are a doctor, an accountant or a financial adviser, the client always needs to know the price and understand the value of the service," Bateman said.

Earlier this week, the FPA responded to Hewison's comments, stating the decision over whether advisers should charge commissions or fees is a decision for the consumer.

"The FPA have principles for managing conflicts of interest, which have been adopted by all members, and cover the behaviour and disclosure relating to remuneration, respective of whether payment is made by fee or commission," FPA chief executive Jo-Anne Bloch said.