Canadians see Australia’s commissions removal as a fail
Most financial planning clients want to make their own decisions about how they pay their advisers, including via commissions, according to new research covering the Canadian financial planning industry.
While the Australian financial planning industry has already largely abandoned commissions, the Canadian industry is still arguing over the merits of various forms of planner remuneration and new research has revealed most client want to make their own choice.
The research, conducted by the Financial Advisors Association of Canada (Advocis), found that 88 per cent of clients surveyed said they wanted to retain choice in the manner in which they paid their advisers, including via commissions.
And in its analysis of the survey result and in reference to proposed legislative moves in Canada, the Canadian Advisors Association stated:
"One of the options is to ban third-party commissions paid to financial advisers by their dealers for the advice provided to consumers in assisting them with their mutual fund purchase decisions."
It said, "Such a ban would be similar to what has taken place in other jurisdictions such as the United Kingdom and Australia. In both countries, early results indicate the banning of third-party commissions has resulted in an advice gap — where high-quality financial advice is increasingly unobtainable for those who need it most".
The survey results obtained by the Canadian organisation were not dissimilar to those obtained in Australia with 96 per cent of Canadians working with a financial adviser stating they believe the advice they receive is "very valuable" or "somewhat valuable".
Commenting on the results of the survey, Advocis chief executive, Greg Pollock said it was clear Canadians valued their financial adviser and do not want that relationship disrupted.
"If a ban on commissions is successful, as some are calling for, we will see a sharp decline in access to professional advice because those who need it most won't be able to afford it," he said.
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