FPA links commissions to fee for no service

The ending of grandfathered commissions should occur over a three-year transition with all rebated commissions going to the client rather than to product manufacturers, according to the Financial Planning Association (FPA).

The FPA used a submission to Treasury to repeat its consistent call for a three-year phase-out of grandfathering with the organisation’s chief executive, Dante De Gori stating: “The FPA supports the phasing-out of grandfathered commissions on the basis that the Government meets a range of principles, notably: that consumers are not left worse off by the change; that the Government provides for the rebating of commissions to consumers; and that the Government addresses potential unintended tax and social security consequences”.

De Gori said the FPA was concerned by the lack of detail included in the draft Bill underpinning the changed grandfathering rules, including details that would indicate the Government was going to satisfy the principles which had been laid out by his organisation.

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“While we understand the Government intends to create regulations to manage the rebating of commissions, this creates added uncertainty for industry particularly given the shortened timeframe in which the Government proposes to introduce this reform,” he said.

Elsewhere in is submission the FPA restated its anti-commission stance noting that its “Financial Planner Remuneration Policy is based on some fundamental principles, including that consumers who are well informed and well educated make better decisions about their finances”.

“To this end, the FPA supports advice fees that are simple, able to be easily understood by consumers, and comparable. The FPA believes that consumers, not product providers, should pay advice fees.”

“Grandfathered commissions on investment and superannuation products are inconsistent with these principles and have led to an environment where some consumers are paying implicit advice fees via commissions and yet receiving no services,” the submission said. “With the Future of Financial Advice reforms having commenced five years ago, it is time to identify an appropriate means of transitioning from grandfathered commissions to an alternative remuneration model.”

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And this my friends is why the industry is where it is right now. A bunch if lily livered suits who instead of fighting for their members rights, became a quasi consumer /training/code monitoring organisation that is in bed with the ISA, Choice, adviser ratings, and all of our other detractors. Shame FPA Shame, talk about a trojan horse, look no further. There has been not one interviews in the mainstream press with any of these people for years and years, they have no public support, they cant lobby to save themselves, why do people keep paying their fees? They are selling out the very people that they are supposed to support, this is just madness.

Well said Hang On, it is utterly disgraceful.

And what happens to planners in all good faith that have borrowed to by a practice since FOFA especially ones in the year or two leading up to the Royal Commission. As we are contacting and changing clients to a fee (going on since 2016 in an orderly manner) we have found some fund mangers only allow cancellation of trail but you cannot have a fee debited or allow a fee on a percentage basis only. We are finding a number of clients prefer this to a bank debit.

Just this week I spoke to 3 clients who have agreed to change to a fee but find the whole thing a bit crazy as they are fully aware of what they pay me via trail and all said if they were unhappy they would sack me.

The bottom line is with nearly all planner associations singing off different song sheets the Government whoever it is will pass legislation that it wishes. The horse has bolted it all to late but to adapt to the new requirements whatever they be.

So Dante De Gori was an Authorised Representative between 2006 and 2007 for a total period of 1 year and 8 months.
Does this provide practicing FPA members the confidence that decisions made on their behalf which will significantly affect their entire professional lives are coming from a position of clear understanding ?

A healthy percentage of these so called "fee for no service" payments are used to cover PI Insurance, ASIC registration fees, office rentals, office staff costs, IT costs, phone costs etc etc. If I don't cover these costs & my office isn't open, I cannot provide any service to anyone. Give me a break.

Oh right so its ok to charge people for nothing because you have business costs? Haha give me a spell.

Add value and charge a fee or dont get paid.

No different to Industry funds charging all members to run their intra fund advice service.... not all members use it!

Agreed, both are wrong. Lets set a better example.

Reality, you seem very black and white which makes me think you have never serviced a client in your entire life. But that aside, following your statement above, what is your view on charging everyone a fee and providing advice to only a few as is the funding model for intra fund advice? To me intra fund advice is commission paid and retained by the product provider which pays staff to do what advisers do. The only difference is staff a much more loyal/controllable and will recommend their employers fund every time.

I agree, intrafund advice is wrong. I dont believe in people paying for services they may not be using, especially when they don't have a choice.

My clients think the same, the ones I actually service in return of annual fees or I don't get paid.

Yes, Industry funds take 0.5 bips pa off the investment managers, & have no need to disclose they have retained it. Advisers don't have such a luxury. And the Industry Funds know exactly what they are doing. Fortunately some of the Investment Managers are privately letting the cat out of the bag...

I hope they let Treasury know. Treasury seems to be very easily lead.

Wow, I agree with the FPA on something. Unreal.

Pretty simple, as long as all the trail gets rebated to the client then there is no argument to retain these commissions. Just charge a fee accordingly. If you are servicing clients, they pay this fee instead of the previous commission now rebated to them.

If you aren't servicing clients, be thankful you were able to thieve money without repercussion for so long.

What is that word you used, thieve Mr Reality? A little harsh from an ignorant. How dare you? I have been practising for 38 years have a DFP CFP and a Masters In Financial Planning. Do you have a Masters degree in Financial Planning? Given that your grammar is so poor, I doubt it. Service is provided on a very high level by most of us. However, as I stated ,for those policy holders who feel that they have not received adequate service they can pick up the telephone, email or write should they require assistance. The ongoing costs of operating a practice is not cheap. You are possibly an employee and would not understand and probably only work 9 to 5. You have to be very careful if you are going to denigrate somebody like myself and to refer me as a thief is defamatory so I would be vary careful with the language you choose.

A lot of stabs in the dark there, DA. All of them wrong.

Eventually you'll realise that we are trying to move to a profession and as far away from how the industry was 30+ years ago. Thing evolve, back then was purely was sales, this is advice. Some people perhaps intend on being in the industry longer than you do as not everyone has been able to ride the gravy train that has been financial planning for 30 years pre-FOFA.

If you do not service clients, you have no morale right to be paid. If you service these commission paying clients, you'll have no issue with getting them to pay a fee in your next meeting with them, especially if this commission is rebated back to them as proposed by the FPA. I dont pay a retainer to my doctor, dentist, chiro etc, I pay them when they provide me with a service. We should be no different and until we operate like this, we are going to keep being perceived as nothing but salesman.

The only advisers who would 'suffer' here are those that know in the back of their mind they are about to lose a huge revenue stream as they haven't been actually servicing these clients so they wont pay a fee. That's not everyone else's fault.

If you properly service these clients, my comment is not directed to you. Its directed at the 'advisers' we all know that have thousands of clients each they could never service if they tried.

So your directing comments at someone like me. Well than, explain how intra fund works.

Tell me Reality, do you also believe that commission remuneration for risk insurance should be eradicated ?
Every time you receive advice from your Doctor, Dentist or Chiro they don't have to complete an SOA or ROA or produce documentation that proves they have analysed other possible options available and justify why they have recommended a certain medication or procedure compared to another !
They complete file notes as evidence of what occurred as a record of your visit and any necessary follow up.
Imagine if they had to complete an ROA every time a patient came into their practice....they wouldn't be able to churn through 12 patients in an hour subsidised by the taxpayer.
Do they have to disclose the referral to the next door Pharmacist for the medication when they are a tenant of the building they own as a conflict of interest ?

No, fine with risk commissions. Don't personally take them but they remain relevant IMO.

Whats the relevance between SOA or no? Thats got nothing to do with whether you receive a service or not, absolute strawman.

Do you pay your doctor, dentist etc if you dont see them that year or do you only pay when you actually see them?

The FPA is a quasi political support group, they use members money to fund exhorbidant internal salaries, write ill informed submissions that do not reflect what their membership are saying?? One Roadshow per year does not mean you are engaging with members, online surveys that get less than 10% response rate is not a reflection of what 14000 members are saying!
They are out of touch with the financial planning community because they are more interested in appealing to government, big end of town (again) and consumer groups because this makes them look holier than thou!

You have to remember most FPA members are like that dirty brown ring around the bathtub after the water runs out.

Their members (AMP/CBA/NAB) have already been hauled before the Royal Commission and other members are just complicit in this behavior for saying nothing and there happy to have these members in their midst. Remember also that most members are forced to join the FPA by their employer such as the CBA as part of the great CBA advice scam of 2017 and the deal that was made in return for the FPA's silence. The majority of their members have their fees paid for them by products and platforms & they don't even make a decision to join...it's paid automatically.

You'll recall that FASEA rightly punished them and gave them only 2 Credits for their CFP course. Working in this collective it's no wonder that the CEO thinks commissions lead to poor behaviour. It's no wonder the CEO thinks this way as after all the FPA is a collective of people with low morals, they love Government Intervention, they love red tape, they excluding Australians from advice and they just don't care about their industry. They just sit back and expect a product provider will do things for them, that not what a profession is about and FPA members would have to be the least professional of all.

Regardless of FPA's other alleged sins, the CFP course is as rigorous if not more so than most uni courses.

It is not FASEA's job to "punish" the FPA. It is not FASEA's job to create more business for courses aligned with FASEA Board Members. FASEA's job is to ensure planners have completed an appropriate level of education, regardless of where or when. FASEA is not doing this fairly or reasonably.

Regardless, you got punished didn't you. Perhaps you should ask WHY.

Agreed. The leadership of the FPA has been questionable for many years. Trail commissions derived from deferred commissions and they support the day to day costs of operating practises. Nobody is being denied service and if a consumer feels that they have not been contacted for reviews, they have the option of contacting the listed adviser on their policies to arrange a meeting. Why are the regulators thinking for the consumers? It belies me that there is now a full blown industry attacking financial services. Regulators have done a lot to damage financial services creating an entitlement class who will not act on unless acted upon. The FPA was a body established to represent self employed financial planners. Today, I am not so sure. We are also over regulated and being made an example of because of a very small minority of financial planners who have overstepped their mark. Our passive income is shrinking due to the banning of commissions initially starting with corporate superannuation.
The Hayne Royal Commission has overreacted with its recommendations without really understanding the implications of its actions.

Mr De Gori needs to explain to we, his members and to our clients how to implement this change and why. My Practice only has a few affected clients, but most of these are in long-term legacy products, that if changed to a new product, would lose grandfathering under Centrelink rules and lose out on entitlements there. Hardly in their best interests.

I'm no Einstein, but as the commissions are a tax deductible expense to funds, stopping commission payments will not mean that 100% of the commission amounts will be passed onto clients.

How will the clients be better off, if I charge them the same amount as a fee as I receive in commission with a net worse off position? I should add, that as these affected clients are long-term clients, before a lot of the extra compliance costs came in, I have not charged them a fee over and above the small trail commission I receive, even though I treat them just the same as higher paying fee clients.

Removing trail commission will only help to put financial advice out of reach of many Australians. I trult look forward to the FPA Roadshow this year so rank and file regional advisers can ask the FPA hierarchy can ask them why they have sold us out!

Does anyone know if I DON"T renew my FPA membership this year (I am a CFP) will I still get 2 credits for my CFP?
I suspect we are all only remaining in the FPA for this reason and the fact that it is a yearly membership ending in June so the first opportunity to send a clear message to the FPA for the damage they have done in the last year is closing in.
Joint the AFA?

The FPA have never understood or worked out they represent Advisors. They have always been a complete joke and are still continuing on there merry way in there own little world. The best thing they could do for Advisors is sail of into oblivion.

I agree with most of the above criticism of the FPA. Long time member but they seem to be working for a more elite group of advisers that have high net worth clients that FEE FOR SERVICE works for. Most of my clients are moms and dads who are trying to keep up with the day to day rising costs of living. Even with rebated commissions having another expense to keep track of in bank account will be hard going. They much prefer payment from their investment portfolio. They know it happens and they know that unless I provide service they can turn it off. AFA's suggestion of a fee opt-in option for clients works for me and provides an opportunity of the client to say YES or NO

At annonymous, you can leave the FPA and get the 2 FASEA credits. The credits are for completing the course...not for being a member. If in doubt just downgrade and pay $500 for basic membership as opposed to CFP status. I'm leaving the FPA in June myself. I'm over regulation, and the FPA is part of the problem now. I was very passionate about lifting professionalism via FPA membership but they just think "what's the best thing for the FPA first" then they think about the needs of the platform providers, then they think about Advisers and Australians last. That's been reflected in their dealing with Treasury.

Here is the address of the Financial Planning standards board that controls the CFP brand. All CFP holders in Australia please write, tell them about the Royal Commission, tell them how the FPA was shamed, tell them about the lack of faith in the CFP brand and plead that the FPA be stripped of it's CFP distributions rights. Just don't quit the FPA write to those that oversea them and tell them why you're ceasing membership.

Financial Planning Standards Board Ltd.
707 17th Street, Suite 2925
Denver, CO 802021
Email: [email protected]

Hang on, the FPA gets commission from product providers too. It's called the Professional Partner Program. What's the difference. Wait..I know....if the FPA turn off payments from CBA Financial Planning then the FPA will go broke. Hence hush hush that's why we disclose them as member fees. Does this not make anyone else sick to the stomach that these guys are having closed door meetings with these firms, getting cash payments from them, calling them member fees even.. and then claiming to represent Advisers. Like what is wrong with the morals of these people.

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