MLC is trying to start a private banking network for its richest clients but is locked in a battle with fund managers over rebates.
National Australia Bank's wealth management arm is trying to make fund managers dial down their commissions on certain products as a condition for getting access to cashed-up investors.
"MLC has a whole lot of products that are fee for advice but some of the other contributors don't offer that," MLC general manager of advice solutions Greg Miller told InvestorDaily.
Miller said MLC was talking to all providers on its approved product list about the issue and structured products were coming under particular scrutiny.
"We want to operate under a fee-for-advice principle. We want the provider to think about how advisers operate under that principle to lower rebates," he said.
"We have been talking to Macquarie [Bank], for example, that has products that would be useful in this marketplace.
"What we're saying to them is, if you don't give us the ability to dial down the commission, we can't use the product.
"There's not a place for commissions in this market and these guys are all fee-for-advice advisers.
"So if you see a product that would be useful to this clientele but you don't allow us to dial down the commissions, we don't want to use it.
There's a number that won't allow you to do that."
He said providers argued advisers could rebate the commission to their clients.
However, he said that raised a tax problem for the client.
"What is the major issue that all those people have got? Tax. It is counterproductive to the strategy," he said.
MLC is the only bank-owned institution to offer fee-for-service-only financial planning through subsidiary Godfrey Pembroke.
Fifteen out of the 20 advisers from MLC dealer groups taking part in the trial are Godfrey Pembroke advisers due to the group's high net worth client base.
MLC is moving its other planning arms away from accepting commissions.
A Macquarie spokesman would not confirm discussions were taking place with MLC but said it was a matter for Macquarie's equity markets group.
"Fee structures are confidential things that they wouldn't normally talk about," the spokesman said.
The private advice network, which started in April, is expected to be up and running by the end of the year.
Currently it involves advisers mainly in Sydney and Melbourne.
The strategy involves advisers taking on the job of chief financial officer for their clients.
They would then provide them with comprehensive services in tax, estate and succession planning, risk and investment strategies.
