Whether they charge a flat fee or trailing commissions, financial planners want to be seen as professionals, the final plenary session at the Financial Planning Association (FPA) conference in Sydney heard on Friday.
In a discussion in the vein of the ABC’s ‘Difference of Opinion’ program, Jeff McMullen hosted a panel of experts with opposing ideas about the best fee model for financial advice. Noel Whittaker, a financial commentator, argued there was no conflict of interest inherent in trailing commissions because thousands of products were available for the same fee. “If there is an image problem with financial planners, it is because of the media,” he said. “If you ask the average Australian whether they would like to pay an upfront fee or have the fee taken out of the growth in the investment, they will always take the second option.” Tony Fanning, chief executive at Best Advice, said there was a “dangerous 5 per cent” of planners giving advice for kickbacks that was giving the industry a bad name. “The same issues apply in other industries; the FPA needs to work closely with ASIC to stamp out bad practices,” he said. “But it would be remiss to say that what the media says [about the negative image of financial planners] does not reflect a position of public sentiment.” Steve Tucker, chief executive at MLC, said that while he didn’t believe that planners taking commissions had done the wrong thing, there should be an upfront agreement of how much the client will pay, and if it is to be ongoing they should be able to stop paying when they are not getting value. “People need to be able to see what they are paying for and be able to control it,” he said. According to Virginia Dowd, managing director at Money Solutions, the problem lay with people not being able to measure and understand the value of the advice they receive. “In most industries there is a customer guarantee,” she said. “We need to give more customer service guarantees, and for any Australian that is something we can do.” On the previous day, former Woolworths CEO Roger Corbett lashed out at the industry, saying that the taking of commissions had compromised financial advice and created widespread cynicism.
Since taking over the top job at the $44 billion Funds SA more than a year ago, chief executive John Piteo has ushered in an investment function overhaul and wrapped up an important stage of the fund’s five-year data transformation program. It pledges to recentre around investment performance and more efficient processes, as the “missing piece” has been found in incoming CIO Con Michalakis.
Darcy SongJanuary 10, 2025
