MLC/Garvan revolt over dealer fee
TheNational Australia Group ownedGarvan Financial PlanningandMLC Financial Planningdealer groups are facing a groundswell of dissatisfaction from their 600 advisers over a decision to charge a “minimum contribution fee” and push ahead with proposals to take a cut of advisers’ trail commissions.
Advisers attached to the dealer groups who contactedMoney Managementhave labelled the moves “greedy” and said they would encourage planners to “just product flog”.
The new minimum contribution charge, announced to planners in March but due to be paid for the first time this month, requires all planners to generate at least $20,000 in income for their dealer from new business sales alone each year.
If they do not, they will be required to pay any shortfall back to the dealer.
The proposal to take a cut of advisers’ trail commissions is still the subject of intense negotiations between the two dealerships and the National Planners Association, an alliance of advisers working for the two groups.
The president of the association, Mark Lewis, has confirmed the changes are causing widespread consternation amongst advisers across the two groups, although he says this is unlikely to force a backdown by the dealers.
“The minimum contribution payment is already in and that is a fact of life. The second phase of the changes is for them to get a slice of the trails. They are going to implement that, it is just a question of the rate,” he says.
A spokesperson for the two dealers says the new costs are standard industry practice and reflect a range of new support services the dealerships are offering.
However, Lewis says it has been explicitly stated during negotiations that the new measures are also being introduced to make up for declining revenues across the two dealer groups.
“All dealer groups are struggling at the moment and they have to look at ways of raising revenue. Our argument is that they try to find another way [to raise revenue] besides from us,” Lewis says.
It is understood the two dealer groups will seek to outline the proposed trail commission sharing proposals to their advisers in detail over the coming months.
However, the move may come too late, with Lewis claiming many advisers are already reconsidering their futures with the dealer groups.
Recommended for you
Two commentators have shared why the inclusion of alternatives in a diversified portfolio shouldn’t be a simple switch with a traditional asset and will depend heavily on clients’ objectives.
Morgans chief executive, John Clifford, has announced he will step down from the wealth management group after eight years leading the business.
Funds under administration on the BT Panorama platform have passed $120 billion in the last six months as it progresses its migration of Asgard into the platform.
Private markets may be the hot topic of the day but two financial advisers have shared the red flags to consider and why advisers shouldn’t be tempted to invest solely in the pursuit of higher returns.
