Super fee lobbying
THERE is strong consumer s upport f or more t r ansparent charging for financial a d v i c e , i n c l u d i n g b e i n g prompted annually to consent for any on-going fees to be deducted from savings by financial planners, according to the Industry Super Network.
The network said the financial advice industry was involved in an unprecedented lobbying campaign of all federal politicians to water down the Government’s Future of Financial Advice reform agenda.
They are proposing that consumers should have to actively ‘‘ opt out’’ of paying on-going fees which many consumers are unaware they are being charged.
A survey, conducted by Newspoll for the network found almost nine in 10 re- spondents ( 89 per cent) believed there should be a law requiring financial planners to act in the best interests of their clients. Of those who had used a financial adviser, 85 per cent of respondents also expressed a preference for paying for financial advice via a set fee or hourly rate, as opposed to having ongoing fees deducted from their investments such as superannuation.
Nearly 75 per cent favoured annual renewal of on-going fees ( opt-in) rather than the opt-out model advocated by the planning industry.
The network’s CEO David Whiteley said the poll made clear that consumer expectations were aligned with the government’s stated reform agenda.
‘‘ Consumers clearly expect full transparency on fees, and are supportive of the government’s agenda,’’ Mr Whiteley said.
‘‘ This research shows that consumers understand that the quality of the advice they can expect from planners is inextricable from the way in which they are paid.
‘‘ If financial planners aspire to be professionals, then they must charge like other professionals do – by an hourly or set fee paid by the client rather than volumebased payments from product providers, and to get annual permission from clients to continue deducting on-going fees from clients investments.
‘‘ The financial planning industry has gone through countless scandals, such as Storm and Westpoint, and is clearly suffering a crisis of public confidence.
‘‘ Despite this, the industry continues to oppose the government’s reforms which are designed to prohibit conflict of interest-based remuner- ation, such as commissions and volume rebates and provides for an annual renewal of services.
‘‘ There is clearly an expectation within the Australian community that the Parliament should act against unsustainable practices that were eroding public confidence in our finance system.
‘ ‘ Consumers understand that how much they pay in fees and commissions affects their final super payout.
‘‘ Conflicts of interest created by the commissions system impact not only on individual retirement savings but also on aggregate national savings.’’
The Newspoll survey was u n d e r t a k e n a m o n g a nationally representative sample of 1200 respondents aged 18 years and over from February 11 - 13.