Assistant Treasurer Bill Shorten has applauded the adoption of new business and pricing models by Australia's financial advisory sector to help businesses recover any lost revenue from government reforms.
The government welcomed new models for financial planners as they "seek to become a more professional industry that is not reliant on conflicted remuneration structures", a spokesman for Shorten said.
"The fact is many of the best advisers are already using a fee-for-service model and the Minister is pleased to see the FOFA (Future of Financial Advice) reforms are driving innovation in this area," the spokesman said.
Shorten's comments come in response to an InvestorDaily article regarding advice participants stating there was the potential to recoup lost revenue streams, such as commission payments, under a well-structured fee-for-service remuneration model.
"There is absolutely the possibility in a post-FOFA world to replace what the government refers to as conflicted remuneration structures with what the government calls under its adviser charging regime different types of fees for service," OnePath advice and distribution head of technical sales strategy Andrew Lowe said.
Lowe said it was possible to replace an initial commission, which would be paid by the deduction of an initial entry fee, with an initial adviser service fee.
"It is possible to replace an ongoing commission with an ongoing adviser service fee, albeit subject to the opt-in requirements," he said.
"So certainly if an adviser was charging at the moment a 1 or 2 per cent initial amount plus a 0.5 to 1 per cent ongoing if that was their desire, they could certainly replicate that in a new world."
Elixir Consulting managing director Sue Viskovic said such an opportunity did exist.
"Absolutely, it's going to mean work. They are going to have to completely change their advice model and their service delivery as well as their pricing. But it's a really positive thing to do in a business," Viskovic said.
