Product fees costing Australians billions
Financial advice and mortgage clients were charged an average of $1800 each in fees last year, largely due to the growing basket of products they were sold by advisers and brokers, according to research undertaken by Rice Warner.
A report prepared by Rice Warner, and commissioned by cash-back provider YourShare.com.au, found Australians paid $3.367 billion in total fees in the year to June 2013, the bulk of which were related to life insurance, mortgages, superannuation, pensions and managed funds.
From the research, Rice Warner deduced that advisers are likely charging an average 20 per cent trail commission on life insurance products and brokers 0.20 per cent on mortgages.
On a per person basis, an average of $688 was paid out in fees on mortgages, based on a loan size of $344,221, with a suspected 20 per cent trail commission on premiums.
Meanwhile, an average $546 was spent on fees for non-super managed funds and $404 on life insurance.
“These ongoing fees are hidden to many consumers because they were either not disclosed or they were buried deep in paperwork when you initially bought these products,” YourShare CEO Ron Hodge said.
“$3.367 billion is an enormous amount for Australians to be paying out in annual, ongoing fees to advisers and brokers for the financial products that most of us have, especially if you are no longer being serviced by your adviser or broker”.
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