RC to drive 'fuller separation' of remuneration and product

The royal commission's hearings on financial advice are likely to be the "catalyst" that pulls remuneration and product choice apart more completely, according to Rice Warner.

RC to drive 'fuller separation' of remuneration and product

elaina

Last Updated: 24 April 2018 Published: 24 April 2018

In a post on the company's website, Rice Warner said current advice business ownership models and product structures make it "difficult to focus on goals" and subsequently undermine the purpose of advice.

However, the company said the Royal Commission into Misconduct in Banking, Superannuation and Financial Services Industry will likely change this.

"The Royal Commission seems likely to be the catalyst for fuller separation between remuneration for advice and choice of product.  This should mean an adviser would be agnostic about any product and should be paid by the client," the company said.

"This is the situation which occurs with most other consumer dealings with professionals - they receive an invoice for services rendered. It should be possible to arrange for this fee to be debited against a financial product, but this should be the consumer's choice and under their control."

Rice Warner said the challenge will be educating members of the public about the value of advice and ensuring adequate governance standards are created.