The chief executive officer of MLC and executive director of NAB’s wealth division, Steve Tucker, has hailed the release of the FPA’s paper on financial planner remuneration as “the end of the product era, and the beginning of the advice age”.
Tucker says it’s been clear since the Australian Securities and Investments Commission (ASIC) conducted its controversial “shadow shopper” survey that the remuneration of financial planners would be the main stumbling block on the road to greater professionalism and consumer confidence.
“We have felt that this day would come, when professional associations like the FPA stood up and said [financial planners] need to shift their systems onto a more professional footing,” Tucker says.
“We’ve been preparing and leading and challenging our advice partners – and the industry – over the past two years to progress in this direction.
“So we’re delighted to see the FPA taking a stand on this issue and we see this as a tremendous step forward – of a number of steps than need to be taken.”
Tucker says fund management firms like MLC that had anticipated this move have already developed product ranges that will accommodate the FPA’s proposals. Tucker says there will be little effort or cost involved in making sure they work effectively for planners who adhere to the FPA’s principles – once they come in, most likely mid-2012.
However, he says that in MLC’s case, there are a few areas that may need attention – notably corporate superannuation. “There’s a few challenges there,” Tucker says.
NAB’s financial planning operations have been moving in the direction set out in the FPA’s consultation paper for a few years now.
“Godfrey Pembroke and NAB Financial Planning are 100 per cent fee-for-service, along the lines of the FPA’s suggested code,” Tucker says.
He says the traditional product commission system “has been a reasonable system, but it has run its course”.
“It’s going to be a very meaningful step forward,” Tucker says.
“This is the end of the product era and the beginning of the advice era.”
The general manager of Colonial First State-owned dealer group Financial Wisdom, Tim Browne, says the company supports the FPA’s stance. He says it’s difficult to comment on the precise impact the principles will have on specific advice businesses until the consultation process has run its course and the final form of the proposals is known.
“But you would have had to be living in the dark not to have seen something like this on the horizon,” Browne says.
“It’s fair to say that we have been preparing for this debate.”
Browne says FinWiz has put in place programs to help financial planners move to new business models, learn how to structure and value advice services and how to determine appropriate pricing.
He says that will continue during the consultation phase.
The chief executive of CFS, Brian Bissaker, says the institution’s philosophy has been to allow financial planners to charge clients on whatever basis they choose, and to accommodate those choices in how CFS’s products and services are structured.
Bissaker CFS the firm supports the FPA’s position on remuneration.
“My perception is that…most product manufacturers have a suite of products that financial planners could start using tomorrow, if they want to,” Bissaker says.
“The FPA is going down this route; I think it’s a sensible thing for them to do. It’s a recognition that there’s an evolution going on, and the FPA is part of it.”
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