3 Comments 3 CommentsThe Investment Savings and Insurance Association (ISI) said in April that it was planning to finalise a voluntary policy to discontinue the payment of commissions on investment products and KiwiSaver funds.
However, ISI chairman Sean Carroll said the current extent and pace of change within the industry has been a challenge. Even though a further change, like the ban, is the right thing to do, people are suffering from change fatigue.
Carroll says the voluntary policy to discontinue the payment of commissions on investment products, is not going to happen anytime soon as there is already so much going on.
He says the ISI is not looking at introducing its policy to discontinue the payment of commissions imminently.
"We're not looking to make a radical change in say the next six months; we need to take time to get the policy right. It is something we continue to work on."
He said a lot needs to be taken into account such as changes to business models for advisers and manufacturers.
"You can't solve all the world's problems in one day," he said.
The ISI wants to design the change away from commissions in the most appropriate form before someone else does, as international trends are heading that way with both the UK and Australia banning commissions.
"We need to get the policy right and you can rest assured that we are consulting fully with adviser groups and stakeholders before we do anything drastic."
Sub committees have been made to look at commission on investment products and commission on insurance products.
The ISI is hoping the effect of proposed changes will be a move that results in consumers negotiating a fee for the service they receive which will ensure the consumer is fully aware of the cost and how that advice will be paid for.
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As manufacturers your role is to build products and remuneration methods that meet demands, and strengthens the ability to gather assets. The last few decades of minimal product innovation highlights a low propensity for advancement in this area, in preference for a continuation of ‘me-too’ products.
The majority of folks promoting the fees v commissions argument are well-meaning industry-peripherals with the primary aim of promoting themselves as being consumer sensitive. Many have neither discussed the fees v commissions argument with either the consumers or intermediaries – who in the main – are happy with both billing instruments as long as there is full disclosure prior to the event.