No view on ending adviser commissions: AMP

AMP advice head Anthony Regan told the Royal Commission that he has yet to "turn his mind" to the idea of mandating a cessation of the commission-based adviser remuneration model, despite personal reservations.

Senior Counsel Assisting Michael Hodge asked Regan whether AMP had formulated a view on whether it would be appropriate for planners to only charge fees-for-service rather than receive ongoing commissions.

Regan responded that he hadn't seen anything that would indicate as such.

"But you are the group executive in charge of advice. Ultimately it must be your decision. You are responsible for it," Hodge said.

"I haven't had discussions," Regan replied.

Regan said his personal preference would be fees-for-service, but that the status quo was for clients and advisers to make their own arrangements.

Hodge then asked whether there was anything stopping AMP from adopting the position that planners should not be taking commissions and should only take fees-for-service, and Hodge conceded AMP could do that.

"Why don't you, then?" Hodge asked.

"The arrangements we have in place are to let planners negotiate their own arrangements, and we're working through the overall grandfathering period," Regan said.

When prompted what he meant by this, Regan said that commissions are already "dropping away, and fees are taking over." This occurs as clients are negotiated into new arrangements, or alternatively "customers complete their arrangements and new customers come on."

"But the proportion of fees as a function of the total has gone from something like 10% to something like 40%. Well, 30 to 40% for the sake of the discussion, but the point is that commissions are phasing out over time, which I understand is a function of FoFA," he added.

Ultimately, Regan conceded he believed that moving exclusively to a fee-for-service model is "much more consistent with the idea of a profession."

Read more: AMPAnthony ReganRoyal CommissionMichael HodgeFinancial advice
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