FINANCIAL planning group Associated Planners has taken an industry lead by refusing to accept ‘soft-dollar’ benefits from fund managers.
FINANCIAL planning group Associated Planners has taken an industry lead by refusing to accept ‘soft-dollar’ benefits from fund managers.
The benefits that will no longer be accepted include fund manager rebates and trips or conferences offered by fund managers.
Associated is Australia’s 20th largest financial planning group and is one of the few large dealer groups not wholly owned by a fund manager.
It has six offices in Western Australia and State manager Wayne Rimmer said the group was looking to expand.
As well as taking unilateral action against soft-dollar benefits, Associated has formed a working party to formulate what it hopes will be an official position on the issue of soft dollar benefits.
The working party members include senior representatives from fund managers including BT, Credit Suisse, Norwich and Challenger.
Formation of the working party follows the establishment this year of a joint working group by the Financial Planning Association and the Investment and Financial Services Association to review the same issue.
Associated managing director Ray Miles said the actions of his group would add to the momentum to ban soft-dollar benefits.
“Everybody agrees this shouldn’t happen,” he said.
“It’s the kind of thing that puts doubt in the customer’s mind and that is the last thing we need.
“We believe it’s time for financial planning organisations to establish a clear position on soft-dollar payments.
“It’s important for AP that we stand apart from the industry as the first adviser group in the Australian market to do this, and as a company willing to take an ethical, as well as commonsense, approach to what has become a vexing issue for advisers and consumers alike.”
Mr Miles said he had identified up to 16 different types of soft-dollar benefits and the working party would seek to define which of these were acceptable.
“In essence, our working party aims to establish a policy that supports the removal of many soft-dollar benefits available from suppliers that have the capacity to influence an adviser or dealer group recommendation,” he said.
“Obvious areas that would come under review are fund manager rebates, conferences, volume bonuses and sponsorship of seminars.”
An extreme example is when fund managers send financial advisers on an all-expenses paid trip to, say, Paris or Hayman Island, ostensibly for education purposes but only after the adsvisers have achieved sales targets.
Mr Rimmer said Associated’s advisers voted on the issue at their recent conference.
“As a result, Associated Planners will no longer accept fund manager rebates,” he told WA Business News.
“These will be given to charity until they can be passed directly back to clients.
“Our member firms will also not be eligible to take trips or conferences offered by suppliers.”
Associated’s definition of soft-dollar payments will not exclude all contact between manufacturers and advisers.
“Invitations from suppliers that are focused on solving clients’ problems, and further useful relationships with advisers, should continue,” Mr Miles said.
