An online poll has revealed that while the advice community is still largely divided by the current government’s plan to ban grandfathered commissions on January, 2021, the majority believe the ban should happen on or no later than the proposed date.
Participants in the Professional Planner survey were asked whether the date Treasury announced would mark an end to grandfathered commissions was ‘too late’, ‘too soon’, or ‘spot on’.
The results were split relatively evenly; 34 per cent said the ban date was spot on and 35 per cent said the date was too soon, while 30 per cent indicated that the ban date was too late.
The fact that a combined 64 per cent of respondents believe the ban date is either ‘too late’ or ‘spot on’ confirms the majority of advisers broadly support the decision to ban commissions.
“The majority of advisers are OK with it,” says Centaur Financial adviser Hugh Robertson. “Commissions are dead. Advisers are a resilient bunch and they’re taking the view that they’ve got to move forward.”
Robertson says accepting grandfathered commissions “never felt right”. Despite being an advocate for banning commissions, he has sympathy for advisers that will be heavily impacted by the ban.
“I’d vote ‘spot on’,” he says. “Not for the benefit of my business, but I’d want to pay respect to advisers that want to take their time and re-examine what they want their business to be in the future. Some of these advisers are 25 per cent commission and they’ve got redesign their whole business model.”
According to Rob Pyne, an adviser at HPH Solutions in Perth, the result is “a good indication of where the advice community is at.”
“Advisers that have already cut commissions might be inclined to say that it should happen earlier, while people who might have some legacy but are moving ahead would probably say the date makes sense. And then you’ve got the other third that are still heavily reliant on grandfathered commissions and either disagree with the ban altogether or want the date pushed out,” Pyne says.
Pyne believes the proposed date is “about right”. Like Robertson, he has sympathy for advisers that will be hit hard by the looming ban date.
“They made decisions based on the rules as they stood,” he says, referring to the 2014 Future of Financial Advice laws that led to the quarantining of existing conflicted remuneration.
Pyne says he feels badly for advisers significantly affected by the “short about-face” in policy, which is why he stopped short of saying that the ban should happen sooner.
“It’s not as if these people have done anything outside the rules of FOFA,” Pyne says. “I feel for them, but it’s not right that grandfathered commissions remain.”