Investors still paying sales commissions

Many investors who invested directly into a retail managed investment fund, or even those who have been advised to put their money into a retail financial investment product, may not be aware that they are paying commissions to an advisor.

Commissions are paid by funds and product providers to advisors who sell their products to retail investors. The financial advice industry is set to phase out sales and trailing commissions paid to advisors by financial products and investment platforms.

Last month a federal parliamentary committee, chaired by Bernie Ripoll, recommended that government and the industry work together to find an alternative method of remuneration for financial planners.

Many commentators said the committee had missed an opportunity to ban commissions on financial products. The financial planning association wants the industry to stop paying commissions by July 2012.

Source: The Australian