RI Advice to disclose commissions from 1 July
RI Advice will voluntarily include commissions in its fee disclosure statements, according to the licensee's head of practice development Peter Ornsby.
From 1 July this year, whenever a planner conducts a client review they will be required to disclose the fees charged in the last 12 months along with the services delivered.
But the Future of Financial Advice legislation excludes commission arrangements from fee disclosure statements. Commissions will instead be addressed by the 'opt-in' letter - the first of which will be sent out in 2015.
"The legislation around [fee disclosure statements] excludes commission, but it just makes sense if you're going to deliver a service to a client that you disclose everything," said Ornsby.
RI Advice is taking the position that if a commission is earned, it should be disclosed, said Ornsby.
Rather than worrying about losing low-value clients, RI Advice is seizing the opportunity to make inactive clients active, said Ornsby.
If the client isn't receiving a service then they shouldn't have to pay for it - but in many cases the conversation between the adviser and the client could lead to more business for RI Advice, Ornsby said.
"If we can prompt that conversation, I don't see that as a bad thing," he said.
"It's about really driving a behaviour where the relationship between adviser and client should actually move to a deeper relationship," he added.
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