Fund managers big on adviser perks
Fund managers still widely provide so-called “soft-dollar commissions” to financial planners with perks such as overseas trips, Grand Prix tickets and Bloomberg terminals. New rules to be released in early August 2003 by the Australian Securities and Investments Commission will require fund managers to reveal advisers' fees, however soft-dollar commissions are excluded.
The median Australian managed fund lost 1.6 per cent in the year to June 30, according to InTech Financial Services, and many critics are concerned that perks are still a prominent feature of the industry. Such perks are not banned by the new Financial Services Reform Act but ASIC warns that they could create a conflict of interest. ASIC's Peter Kell said: “Advisers may recommend a product based on the likelihood of receiving a benefit rather than whether it is suited to a client”. A recently-released ASIC policy document clearly states that soft-dollar commissions must be disclosed to clients, Mr Kell said.