Losing life/risk commissions would hurt most
Outlawing grandfathered commissions would have negligible impact on financial planner revenue when compared to the impact of outlawing of life/risk commissions.
That is the bottom line of Investment Trends data which has confirmed that grandfathered commission streams now account for an average of 9 per cent of financial practice income, compared to an average 24 per cent derived from life/risk commissions.
What is more, the Investment Trends research confirms that non-risk commissions which were grandfathered as a result of the Future of Financial Advice (FoFA) changes have been in consistent decline for most of the past eight years.
The data show that non-risk commissions accounted for an average of 30 per cent of financial practice income in 2010 compared to 9 per cent today, while life/risk commissions at that time represented 25 per cent of revenue, very close to today’s number.
What the Investment Trends data show is that asset-based fee for service revenue and fixed price fee for service have been the growth areas when it comes to financial planning practice revenue growth.
The data show that asset-based fee for service revenue grew from an average 22 per cent in 2010 to 29 per cent today, with fixed price fee for service rising from 14 per cent to 32 per cent and hourly-rate fee for service being introduced to reach five per cent.
Recommended for you
TAL has introduced four new courses to its Risk Academy focused on ethical dilemmas as part of Ethics Month to help advisers meet their CPD requirements.
Unadvised Australians believe they need $2 million to retire comfortably, according to Colonial First State, a wide variance compared to advised individuals which estimate $1.3 million.
Financial advisers can now access Vanguard’s diversified managed account strategies on HUB24 and Netwealth, marking a “significant expansion” through new distribution channels.
The heads of two financial advice licensees have joined the board of the Financial Services Council as it looks to deepen its engagement with the space and strengthen its representation.