MLC has launched a new version of its MasterKey platform that contains no commissions, aimed at supporting advisers who conduct the majority of their business on a fee-for-service basis.
The new product, called MasterKey Fundamentals, will require advisers to specifically agree to a remuneration fee with their clients before any funds are invested into the platform.
MLC developed the offering over a 12-month period in response to the trend towards fee-for-service advice in the Australian financial services market.
“Currently, about 30 per cent of the business that MLC gets from advisers from various sources comes in on a fee-for-service basis and we believe that within 12 months that will be greater than 50 per cent. So it’s hard to deny there’s a significant trend toward this fee-for-service advice model,” MLC chief executive Steve Tucker said.
Until now, advisers recommending the MasterKey platform on a fee-for-service basis were faced with the inconvenience of having to rebate all of the commissions contained in the product before calculating a fee to charge the customer.
Tucker stressed the launch of the product in no way meant MLC favoured a fee-for-service model over one containing commissions.
“We don’t necessarily think it’s our job to decide which is better, commissions or fees. What we do believe is that it’s our job to provide choice and transparency to make sure people have the opportunity to work in the way they want to work,” he said.
Tucker pointed out that the new platform would also allow consumers to make easier and more meaningful comparisons between MasterKey and other products that do not contain commissions, such as industry superannuation funds.
“Comparisons to date have always been slightly confused because most of the platforms have a built in commission in them, which is used to pay for advice, and most of the industry funds do not,” he explained.
National Australia Bank regional general manager, financial planning and third party, Matt Lawler believes the launch of the product marks the beginning of a cultural change toward fee-for-service advice in the financial services industry.
“This launch in itself will be a symbol … we will still have the debate with people who want to use commissions, who don’t believe there’s an issue, and we still have to manage them and have a facility for them. But the weight of where the industry goes will actually pull them at some point in time, if not push them, to this space,” he said.
