Tate, who is in Hong Kong at a Financial Planning Standards Board meeting, says the question about whether commission was a sustainable remuneration structure for the future is being discussed by delegates.

“One of the things that has been highlighted here is that if you remove commission, you harm the lower net worth individuals who can’t afford to pay the fee.  Commission means consumers more broadly can take financial advice.”

Columnist Martin Hawes wrote over the weekend that real estate agents and financial advisers were not trusted because of the perceptions of self-interest associated with their industries.

“An individual or professional group who appear to be only in it for the money, are among the least trusted of people. … we tend to not trust people who are remunerated by commission - they have a very high self-interest factor because they only get paid if they persuade us to do something.”

He said the public would not believe that financial advisers were putting clients’ interests first until they stopped receiving commissions.

“Most of us remember that the industry used to be almost exclusively people who were basically selling investments on commission - and that many financial advisers happily banked the commissions that they received from selling people into dud finance companies.”

Tate said he did not personal disagree with Hawes’ view but there ways for it to be implemented with benefits for the customers, encouraging more people to take advice.

He said that relied on the professionalism of the practitioners. “Like any industry, we’ll always get people who ride the fringes and consumers who don’t understand why they are paying for. But if it’s fully disclosed I don’t think there’s anything wrong with taking a brokerage or fees.”

Tate said that for insurance products, there was only about a 5% difference in commission between the various products available.

The IFA does not take a view on whether commissions or fees are better but requires that advisers use an agreement that sets out everything that is being charged. “We all know the client pays no matter what path is taken, whether it’s from the client’s bank account to the adviser’s bank account, or from the client, to the fund manager or insurer, to the practitioner.”