Royal Commission’s impact on financial planning.
There’s been lots of talk about the Royal Commission (RC) lately but it’s time to explain what it means for the financial planning industry. In-short: transparency, client-directed fees, a profession-wide code of ethics and putting the client first, are principles that the RC plans to continue to safeguard clients and industry professionals.
At Wealth Market we share these goals and we've always lived them. Our clients' best interests are number one. We're totally unbiased because we're not owned by a bank or product provider - we work for you. The RC made five key recommendations for the financial planning industry.
1. No more trailing commissions
Trailing commissions for financial products sold to clients were discontinued under the Future of Financial Advice (FOFA) reforms in 2013. But it didn’t stop commissions on products that were already sold, called grandfathered commissions. The RC recommends the removal of all grandfathered commissions.
At Wealth Market we have no grandfathered commissions.
2. Ongoing advice fees to be annually reviewed
Currently ongoing service arrangements between financial advisers and their clients are reviewed and renewed every two years, this will now be done every year.
3. Reducing commissions on life insurance
ASIC will review commissions on life insurance in 2021 following the Life Insurance Framework (LIF reforms) that were made to limit commissions made from life insurance products.
At Wealth Market commissions are explained in our Financial Services Guide.
4. A new disciplinary system for financial planners
The introduction of a regulated body, where all financial advisers will be registered. This body will oversee issues of misconduct and hand out sanctions, setting a high benchmark of standard practice.
5. Quarterly reporting of misconduct concerns
The introduction of mandatory reporting of 'serious compliance concerns' about individual financial advisers to ASIC on a quarterly basis.
At Wealth Market our financial advisers are experienced professionals supported by our corporate team, including a strong compliance framework, practice management, ongoing training and accreditation, to bring our clients quality financial advice.
The RC’s recommendations for the financial planning industry will see a more secure, transparent and trusted industry for advisers and customers. The CEO of the Financial Planning Association, Dante De Gori commented, “it is our objective to help create the environment that will enable all Australians to achieve a more secure financial future” and we as a team at Wealth Market support this goal.
Disclaimer 2019: This document has been created by Wealth Market Pty Ltd (ABN 56 128 350 112, AFSL No. 482898). It provides an overview or summary only and it should not be considered a comprehensive statement on any matter. This information has been prepared without taking account of your personal objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your specific objectives, financial situation and needs.