TheFinancial Planning Association(FPA) has voiced opposition to Labor’s proposed ban on commissions for superannuation guarantee contributions, arguing this would make it harder for clients to obtain advice.
FPA chief executive Kerrie Kelly says replacing commissions with an upfront fee as proposed by Labor could particularly affect the ability of low to middle income earners to obtain basic advice.
The Labor policy, announced yesterday by Labor leader Simon Crean and Shadow Minister for Retirement Incomes Senator Nick Sherry, would see commissions on compulsory superannuation prohibited where an individual alone joins a fund, though if individuals as a group join a fund, commissions may be allowed.
Kelly says the issue should not be how planners are paid but if there is full and frank disclosure of fees and commissions, and that consumers have the availability of alternative remuneration approaches and choice.
“The advice market is now very competitive and approaches to fees and commissions are naturally changing due to market pressures. Legislating for upfront fees is not the way to assist Australians get best value-for-money advice,” Kelly says.
“The reality is that there is a cost to produce good advice, including knowledge, research, ongoing professional development, and compliance, and there is no such thing as valuable free advice,” she says.
According to Kelly, the Financial Services Reform Act has robust disclosure requirements and should be given a chance to work.
However, the FPA did welcome Labor’s recognition that there are benefits for employers obtaining financial advice and education on behalf of their employees as part of their superannuation obligations.
As part of the Labor policy, regular monitoring of financial planners through “shadow shopping” would also be the norm, while a definition of independence would be sought and education standards upgraded.
