Planners could lose their FPA membership if they don’t comply with the association’s recommended fee-for-service model.
If the industry adopts the FPA’s recommendation for a fee-for-service model, planners would need to adhere to the new policy within three years or they may be at risk of losing their FPA membership, FPA chief Jo-Anne Bloch said.
On Friday, the FPA released a member consultation paper on financial planning remuneration that recommends all members should move to a fee-based or a client-directed remuneration model by 2012.
Moving to another professional body in order to remain on current remuneration models will not solve the issue, according to Bloch.
“Changing allegiances or associations is not going to solve the issue. This is a much bigger issue and we hope and trust that our members will see their way through this in terms of the future viability of the whole profession and not just their particular circumstances,” she said.
A number of large financial advice firms support the FPA’s recommendations.
“The FPA’s consultation paper proposes clear and sensible principles for planner remuneration which will go a long way in moving the industry forward,” MLC Advice Solutions general manager Greg Miller said.
“Separating the cost of financial advice from the cost of a product is critical in managing potential conflicts of interest and building trust and transparency in the financial advice industry.”
AMP Financial Planning director Steve Helmich also supported the measures.
“We welcome any move by the FPA that will increase confidence in financial advice. The measures will also show the real value of advice between a planner and a client,” Helmich said.
Financial planners tend to undervalue what they are worth. By introducing greater transparency in the fee structure, clients will have a better understanding about the true value of advice, he said.
