Banks defend planner remuneration

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The Parliamentary Joint Committee on Corporations and Financial Services has heard from both Macquarie and BT Financial that advisers are not employed to sell financial products.

As part of the PJC inquiry into ASIC, the Committee raised the issue that both banks make financial products and “also employ advisers to sell those products”.  Both banks were asked whether their planners were subject to sales targets.

BT Financial said that no product sales targets were imposed on financial advisers. Salaried advisers (from Westpac Financial Planning and St.George Financial Planning) have revenue targets and planners participate in a bonus scheme. However, all revenue and asset categories or products are treated equally under the scheme, said the bank.

“Salaried advisers are only eligible to participate in the bonus scheme if they have met certain requirements within a particular period (including feedback from customers and meeting compliance requirements). There are no sales targets relating to particular products, Westpac Group products or asset classes.”

In their owned adviser channels, such as Securitor and BT Select, there are no sales or revenue targets.

Macquarie also denied having any sales targets. Performance-related remuneration is applied equally to Macquarie issued and externally issued products, which means advisers are not incentivised to recommend Macquarie products, said the bank.

The banks also went through their processes for approving products. BT Financial said that all decisions on APLs are made independent of product issuers.

“Planners are ultimately responsible for determining what products are appropriate for their customers’ circumstances. We support our planners in order to meet this obligation, and have trained the planners to understand our process to establish the APL and their responsibilities to ensure they have separately considered any product they are considering recommending in light of the customers’ needs and objectives.”

Products are also compared against others in the market to determine their suitability for inclusion on the list.

Macquarie said that in order for a fund or product to be proposed for consideration for inclusion to the menu (in the majority of cases) an investment grade rating by an external research house is required. Funds or products available are also assessed by their Unlisted Investment Committee.

  • Andrew on 7/08/2013 3:26:02 PM

    James - totally agree with you.

    Innocent Observer. If you go to Ford you know you are getting a Ford. If you go to Westpac and you get Asgard, the client does not know Westpac owns Asgard.

    Alan Tickle. You mention, "There is little difference in platforms". My question is why use platforms in the first place?

    Also, would a Macquarie adviser recommend the Asgard platform and would a Westpac adviser recommend the Macquarie platform - yeah right!

  • alleycat on 1/08/2013 7:19:01 AM

    I'm confused !!
    They all have revenue and bonus targets but these are not linked to targeted product sales ?
    How do you have one without the other?
    Oh by the way BT, how many products are manufactured by you on your adviser's APL's.
    Is it 50.0% or more ?
    It reminds me of the "duck principle"

  • Peter Vickers on 31/07/2013 11:06:42 AM

    My SMSF owns shares in various banks.

    I thus want the banks to have salesmen with very high sales targets and very generous bonus and remuneration structures for their high performers.

    They need to make lots of money selling products so that they can pay me high dividends.

  • Alan Tickle on 31/07/2013 10:20:03 AM

    Re James comment on St George or Westpac using Asgard or BT. Same as CBA, ANZ, NAB or others. There is little difference in platforms it is about familiarity and efficiency in which one is selected by the adviser. The underlying assets is the issue and providing the APL is diverse and no influence or conflict then I can't see a problem.

  • Innocent Observer on 31/07/2013 10:05:17 AM

    There are two issues here.

    The first is product selection. If you go to CBA then you should expect to end up in a CBA product. It doesn't mean the advice isn't good, even if the product isn't the best in the market.

    The second is "sales targets". This is simply the most ridiculous change to FoFA. Show me ANY other industry (other than some public service jobs) where pay entitlements are not allowed to be tied to output? Of course any employer is going to have to get around this roadblock with some kind of "scorecard" or whatever, but this shouldn't be necessary. Employers should be able to sit down with their staff and explain how they are rewarded for their work.

    This is one case where institutionally owned advice channels (and the sales-driven culture) are being particularly beaten up. Give them a break.

  • James on 31/07/2013 9:33:42 AM

    So a planner with St George or Westpac doesn't use a BT or Asgard Wrap for all their clients?

    Pull the other one.

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