ON CREDIT
by Nick Samios
Posted 25 Nov 2009 1:40 PM
Ripoll sparks planner paranoia
Kurt Cobain once wailed that “just because you're paranoid, it doesn't mean they're not after you”. So today I ask you, what if post-Ripoll, financial planner paranoia is not a psychosis but instead a genuine survival instinct?
Alan Kohler tipped the bucket on any initial euphoria that Ripoll was not going to ban commissions by pointing out 'Recommendation 4' in the report: "The committee recommends that government consult with and support industry in developing the most appropriate mechanism by which to cease payments from financial product manufacturers to financial advisers."
So who are among the loudest voices calling for an end to commissions and what is their hidden agenda?
What if in a post commission world, revenue starved independent financial planning practices lost their 'going concern' sale value and were to be picked up for peanuts by the institutions – on any multiple (three times very little is more or less the same as five times very little)?
What if in the end there were only two financial planning outfits left in Australia – MLC and AMP (even Alan Kohler, an advocate for banning commissions, points out that arguably at the moment there are only "five of the buggers")? What then?
Will the narrowing of consumer choice be the ultimate end result of wholesale structural changes to the distribution channels for financial services in Australia? And will the outcome then be cheaper and better quality services for the consumer? Really?
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