The Financial Planning Association (FPA) has responded to the Association of Financial Advisers’ (AFA) stance on financial planner remuneration by calling it short-sighted and an attempt to recruit advisers who disagree with the FPA’s new guidelines.
The AFA made its position on the issue of planner remuneration clear earlier this week. But FPA chief executive Jo-Anne Bloch said the AFA’s rejection of a move away from commission-paid advice was “disappointing and short-sighted”.
“The position adopted by the AFA is nothing more than an attempt to recruit FPA members and runs counter to the best interests of planners, clients and the wider community,” Bloch said.
“It is a shame the AFA is trying to split the industry during a consultation period through misleading statements designed to instil fear,” she said.
“The reality is that continuing to use a commission-based approach leaves planners open to accusations of conflicts of interest and of lacking transparency,” Bloch said.
“This is eroding consumer confidence and acting as a disincentive to people utilising financial planners and risks the industry’s sustainability.”
Bloch said the FPA board believes it is “good public policy to remove barriers preventing people from obtaining advice that will deliver successful long-term financial outcomes”.
“The FPA has long advocated that people should be free to choose how to pay a financial planner, however, removing commissions will dispel accusations of conflicts of interest.”
Bloch spoke against criticisms that a fee-based approach would make financial advice unaffordable for many Australians.
“An asset-based fee, directed by the client, will ensure consumers can access affordable financial advice,” Bloch said.
Bloch also rejected the accusation that the FPA was not focused on representing the interests of its members.
“Professional associations have a duty to act in the best interests of both members and consumers,” Bloch said.
