At IFS we never take commissions, we donate them
It’s more than five years since conflicted remuneration for financial advisers was banned, preventing advisers from receiving payment or commission to distribute financial products from the product issuer.
Unfortunately, the ban did not apply to all forms of financial product, and advisers continue to receive commissions on insurance products, as well as receiving commissions on “grandfathered” arrangements.
In light of the findings of the Royal Commission into misconduct in banking and financial services, many commentators are predicting further regulation to close these loopholes, and some players have announced they will stop taking commissions.
Nonetheless, it appears the payment of commissions is hard-wired into the financial services sector. Recent data suggests a significant number of financial advisers continue to rely on commissions for a large part of their income, highlighting just how entrenched the sales culture remains within parts of the financial advice industry. Around a quarter of advice practices derive 25% or more of their revenue from grandfathered commissions, with 10% deriving over 50% of their income from them. (Source: Professional Planner October 2018)
Industry funds have always seen advice as a service. We spearheaded the campaign to abolish commissions and have never paid commissions to financial advisers, or relied on commissions to support our business.
In some instances, it is not possible to stop commissions being paid to IFS by providers of financial products so where commissions can’t be rebated, these are donated to charity.
On Wednesday November 14, IFS presented a cheque for $50,000 to Fitted for Work, an organisation dedicated to assisting women experiencing disadvantage to get back into paid employment.
Like many of our peers in the NFP super sector, IFS cares deeply about the super gender gap that results in women retiring with 47% less superannuation than men and 30% retiring with no super at all. With factors such as lower pay, running a single-parent household, and time out of the workforce to raise children making it challenging for women, Fitted for Work aligns strongly with IFS’s values.
Fitted for Work assists in building confidence and skills and provides free services including training, mentoring, coaching and importantly, the donation of high-quality second-hand clothing and accessories to assist women secure a job.
Staff and business partners of IFS and Fitted for Work, attended the presentation and were invited to get involved by bringing along items to donate such as quality work-appropriate clothing, shoes, handbags and other accessories which are always in demand.