Institutionally-owned financial advice groups will not follow National Australia Bank (NAB) in stopping their financial planners from taking commissions.
After more than four years of offering people a choice, new clients of NAB’s more than 400 branch-based planners will now pay a negotiated fee for receiving investment and superannuation advice.
They will also receive rebates on trail commissions paid by product manufacturers.
Westpac, Commonwealth Bank of Australia (CBA) and AMP would continue to use both commissions and fees to remunerate their planners, the groups said yesterday in response to NAB’s announcement.
“We do offer customers a choice of how to pay and that choice should be made by the consumer,” an AMP spokeswoman said.
A Westpac spokeswoman said the bank’s new $199 fee-for-advice plan was a “flat fee for service that was simple to understand” but Westpac would continue to use both commission and fee-based models.
A CBA spokeswoman said in a statement: “[CBA] offers choice because some customers find it difficult or simply prefer not to pay a dollar fee.
“We believe that disclosure is the most important thing to consider.”
It became important for NAB to move to fee for advice because commissions would always be associated with product sales, NAB Financial Planning general manager Geoff Rogers said.
“It’s very important that the fees that are paid for advice are understood,” Rogers said.
“A product is not really establishing that for them.”
The FPA backs both commission and fee-for-service models but wants the widespread practice of bundling product and advice fees scrapped.
In 2006, NAB’s wealth management division, MLC, announced its subsidiary Godfrey Pembroke Financial Consultants would move to a fee-for-service only model.
MLC is in discussions with its other planning arms, Apogee FP and Garvan Financial Planning, about transitioning to fee-only remuneration.
NAB’s planners will still receive commissions for selling life and risk insurance.
