An article in today's Australian runs with comments from MLC boss Steve Tucker showing his support for fee-based financial advice rather than commission based advice.  The article also points out the contrary argument that is promoted by AMP, that commissions reduce the cost of accessing financial advice.

We are definitely in Mr Tucker's corner on this one.  We believe that commission based advisers have extra incentives to recommend particular investment products that may not be in the "best" interests of their clients.  Whereas up front fee advice is clear and transparent and allows the advisers to seek the very best advice for their clients.

In terms of costs, commissions are still a cost of investing, however they are "hidden" from view.  As Mr Tucker points out, up front fees can be stopped while continuing to invest in a product.  Commissions are based on the product and continue to be paid until the investor ceases investing in that product.

We can see some of the argument proposed by AMP that up front fees can be a disincentive for smaller investors to seek professional advice.  That is why we use a very reasonable asset based fee as our basis for charging up front fees to our clients.  To get more details on our approach take a look at our web page - Portfolio Plus Service - Fees Policy.

Final comment - if you are not sure whether the investment products you have been advised to use give commission payments back to your adviser we encourage you to check this out and seek professional advice as to whether you could be doing better.

Regards,

Scott Keefer