Ticket-clipping organisations under fire
Dealer groups that “clip the ticket” with over-ride commission payments will soon find their business models under pressure, new AAA Advisers Association chief executive Wayne Smith says.
Friday, November 9th 2012, 6:00AM 6 Comments
by Niko Kloeten
Smith was recruited to the role after doing consulting work with the AAA on its corporate structure, which he recommended be kept as an incorporated society rather than adopting a model used by some dealer groups and becoming a registered company.
His task now is to guide the 62-year-old organisation as it looks to increase its membership of about 250, many of whom are former AXA advisers.
He said a big part of broadening its appeal would be coming up with agreements with other large providers similar to what it recently negotiated with AMP; he indicated one or more agreements could be announced in the next few weeks.
The AAA’s business model offers advantages for both providers and advisers because it doesn’t “clip the ticket”, he said.
“What we know is that historically some of those other business models have historically clipped the ticket with overrider payments. These have been reducing from the big players,” he said.
“Our starting point as we come out from the exclusive position of AXA/AMP is we’ve never needed an over ride payment and won’t need one in the future. If there are payments to be made for a product we want all of that to go to our members.
“It’s a tough and highly competitive industry for the providers and they are looking to reduce costs; one of those I suspect is to reduce overrider payments.”
Smith said the AAA has a four-point plan that includes: working with a greater number of business partners; providing a greater range of services to members; growing the membership base and; growing its revenue base.
He said the AAA would investigate whether to offer CPD (continuing professional development) courses and would look to expand its professional indemnity scheme, which he described as one of the best in the market.
But one of the main benefits of AAA membership remains the group’s negotiating clout, he said.
“From an individual adviser’s perspective it would cost them thousands if not tens of thousands of dollars to sit down with their lawyers and develop the sort of agreement we have negotiated on their behalf.”
Niko Kloeten can be contacted at firstname.lastname@example.org
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