Banning sales commissions from financial advice on superannuation assets will increase super fund members’ retirement incomes and ultimately benefit the financial planning industry, said Paul Howes, member director of AustralianSuper and national secretary of the Australian Workers Union.
Citing research from the Industry Super Network, Howes said Australians “lose” $13 million each day to commissions-based remuneration structures, and that ensuring this amount was no longer extracted from superannuation accounts would boost the nation’s retirement savings pool.
Simultaneously, the ban would encourage more people to seek advice and take the financial planning industry one step closer to professionalism.
“It is a good thing for the for-profit sector and for the not-for-profit sector.”
He said $1.3 billion was paid to planners in the form of commissions in 2009, including $550 million derived from superannuation investments, a practice which “takes advantage of peoples’ inertia and disengagement from their retirement savings”.
This inertia also caused 4 million Australians to currently pay for financial advice they do not receive as a result of trail commissions, and would be countered by the ban.
“That consumers opt-in to financial planning on an annual basis is a ground-breaking achievement designed to combat inertia among super fund members,” Howes said.
He made the comments in a keynote address to an Association of Superannuation Funds of Australia lunch in Sydney yesterday.