Financial planning groups are restructuring salary models to make sure their planners are rewarded after the ban on commissions officially comes in on 1 July 2013.
That is the message coming through from recruiters and institutions preparing for the ban on conflicted remuneration as part of the Future of Financial Advice (FOFA) reforms.
Although the grandfathering clause will lock-in current commissions, institutions are rejigging salary structures to ensure talent is retained and planners are adequately rewarded for the advice they give.
NAB general manager for financial planning Paul Fog said the bank implemented a fee-for-service remuneration model in 2007. He said NAB's planners were driven by base salary and a monthly incentive based on fee and total revenue.
But NAB's 'balanced scorecard' might be reviewed once the Australian Securities and Investments Commission (ASIC) provides further guidance, according to Fog, who highlighted the complexities in balancing reward with regulation.
Fog said planners were also rewarded for various elements within the scorecard including referral rates, the implementation of advice and a small sales component.
The scorecard also measured an adviser's ability to implement advice, which Fog said was ascertained by looking at sales outcomes and results.
"The quantum of that sales expectation relative to all the other items on their balanced scorecard, for me, doesn't feel like it's conflicted in terms of where FOFA is aiming to go, but it is something we are conscious of reviewing when there's further guidance provided to us by ASIC," he said.
Profusion Group director Alison Loader said recruitment trends post-FOFA would be driven by salary restructures to bring bonuses in line with legislation.
"Some people have done that already and some people are in the process of doing so," she said.
BT Advice general manager bank financial planning, Mike Chesworth, said the company moved to a fee-for-service model in October last year for its superannuation, investment and retirement services for BT's Westpac, St George and BankSA financial planning businesses.
"We also implemented a new adviser remuneration model that included a broader range of performance measures that include compliance, personal behaviour ratings and customer advocacy," he said.
Chesworth said BT would make additional changes to align adviser and customer outcomes and "ensure that planners are agnostic to revenue source by moving to a total revenue measure rather than focusing on just new business".
The recruiters said employers were increasingly offering non-monetised rewards to poach talent from their competitors.
Edmund Gill from Hays Corporate Accounts said his clients had been trying to phase out commissions for some time to move away from a 'hard-sell' situation and establish planning as a profession.
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