The Association of Financial Advisers (AFA) has sought to give its members a guide to whether they can convert at least some elements of grandfathered commissions into to adviser service fees, provided it is in the best interests of their clients.
The AFA has published what it has labelled a “Grandfathered Commission Decision Tree” and has stated, using the flow-chart, financial advisers who have grandfathered commission clients will need to undertake a detailed assessment and then carefully consider what action is in the best interest of their clients.
The flow chart/decision tree then asks key questions about the products from which grandfathered commissions have been derived to determine whether an arrangement needs to be cancelled either now or in the future or whether it can be negotiated into an adviser service fee (ASF).
In a number of scenarios within the decision tree, advisers appear to have the option of turn off trailing commissions and discussing with clients the possibility of moving to an ASF.
The starting point for the decision tree is whether a product is broadly competitive and a key element appears to be whether, in any case, “is the client viable for an ASF”.
Comments
No, and isn't that the aim of the regulator? Employed advice (somehow unconflicted) here we come...
Here's a revolutionary idea....
Have genuine relationships with clients and service them every year.. That way its real easy to get them to sign an agreement every 12 months.
Reality, should that apply to all, including Industry Funds charging a Fee to all members for the provision of Intra Fund advice - should this fee not also be Opt In?? I believe the argument for yes is compelling "Have genuine relationships with clients and service them every year.. That way its real easy to get them to sign an agreement every 12 months."
Yes, everyone should operate this way. Nobody should be carved out.
Ever wondered why there are different rules for some - and seeming encouraged by our regulators and Treasuey?
Ever wondered why ASIC has refused to release their register of gifts.
Ever wondered why the Govt are continuing to refuse the release of the Australian Government Solicitor' legal advice to Bill Shorten in August 2011, in relation to the exemption of including the then existing grandfathered commissions in FOFA ?
There have been several requests and reviews of decisions made under the Freedom of Information Act and on all occasions, Treasury has refused to release this advice claiming it is subject to legal professional privilege.
The refusal to release this advice provided at the time can only cast doubt that the current Govt do not wish to provide any basis for precedent in relation to the removal of advisers existing contractual rights to receive this remuneration as stated by Bill Shorten as the reason why these payments were to be grandfathered.
This is a very clear case of adviser's contractual rights being removed via the Commonwealth passing a law resulting in the acquisition of property and without providing any compensation in respect to that loss.
When an industry requests a copy of the original legal advice provided to the Govt and the current Govt refuses to release that advice, on what basis does this not look very, very concerning.
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