Financial planners paid 230% bonuses Stuart Washington July 18, 2009
AT THE height of the boom, executive financial planners within Westpac were told they could earn commissions of $350,000 on top of their base salary of $150,000 — or a 233 per cent bonus — from selling investment products.
The revelation is in an internal document badged Westpac and BT Financial Group obtained by The Age, showing lucrative bonus arrangements enjoyed by financial planners.
Westpac was unable to locate a copy of the document internally and therefore would not comment on it.
The revelations add to continuing debate about financial planners being influenced to sell investment products by commissions instead of their legal obligations to offer advice to the client.
Evidence of the sales culture in banks is also apparent in the comments of a current ANZ planner who said, on condition of anonymity, that he receives about 40 per cent of every dollar earned over targets.
A spokeswoman for ANZ declined to comment on the bank's internal revenue targets or commissions.
And Westpac includes the term "up-selling" in its financial planner job descriptions, also obtained by The Age.
Concerns about commissions for planners have been heightened by the collapse of Great Southern and Timbercorp, which both paid handsome commissions of 10 per cent to financial planners.
An estimated 12,000 planners work for planning groups owned and operated by the four major banks and fund manager AMP.
About another 3000 could be considered free of major institutional ownership, although within this number two large financial planner groups have forged strong relationships with investment product providers.
Richard Klipin, the chief executive of The Association of Financial Advisers, said there were many planners offering independent advice after previous reforms had removed the influence of investment product "manufacturers" (often housed within the big banks).
"(It was) so consumers could get independent advice," he said. "In the main that's happening."
But planners have told The Age that pressure on planners remains through commission or incentive payments for sales of investment products.
One of the big banks to take the lead on the issue, National Australia Bank's wealth division MLC, has banned commissions to its financial planners since July last year.
"The incentive is for the financial planner to have a good relationship with the client," MLC chief executive Steve Tucker said yesterday. "It disconnects the need for advice from the sale of a product. I refer to it as taking the thorn out of the paw."
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