FOFA impact on adviser fees revealed
Conflicted remuneration bans have monumentally changed the way advisers make their money, with the commission model replaced by a move to fixed fees, according to the corporate regulator.
Most surveyed licensees say their fee model has changed since the implementation of the Future of Financial Advice (FOFA) reforms, with a marked reduction in commissions received from assets under advice or product endorsements.
Trail commissions have dropped for 24 per cent of licensee revenue to 19 per cent, according to the Australian Securities and Investments Commission (ASIC) survey of 60 licensees.
However, the proportion of revenue lost in commissions has largely been taken up by fixed fees, which have grown from an 18 per cent share of revenue to 22 per cent post-FOFA.
Fees based on assets under advice have dropped from 27 per cent to 25 per cent of licensees' revenue.
Nonetheless, ASIC noted that some licensees strayed from the average and continued to derive the bulk of their revenue from commissions.
When asked about challenges posed by FOFA reforms, most licensees cited the administrative burden around changes to fee disclosure statement regulation as their top concern.
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