A thing of the past ... a government ban hopes to end reward holidays for financial advisors. Photo: Getty Images
By John Collett
The Sydney Morning Herald
October 19, 2011
Each year, the top salespeople of financial products and their spouses jet off for ''education and training'' at destinations not known as centres of financial excellence. Monte Carlo, St Petersburg, Hawaii, Las Vegas, Cambodia and other exotic locations have been some of the favoured destinations. But at long last, if the government's proposed ban on overseas trips becomes law, the worldwide financial-planner discovery tours with the six-course dinners and tours of local attractions will be a thing of the past.
These reward trips always had a ''training'' component, though that may have been nothing more than an afternoon session with a motivational speaker. And that may only be so the firms paying for the trips can demonstrate a training component to the Tax Office so the expenses can be claimed as a tax deduction. We are not talking about those selling cars or toasters but financial planners who advise people on their life savings. Sometimes the reward holidays are not paid for by the planners' employers but by product providers such as fund managers. Some planning firms have increased the training component so the only time to relax over a three-day event will be an afternoon of golf.
But under the government's draft legislation for its Future of Financial Advice reforms, training of financial planners will have to be conducted in Australia and New Zealand and three-quarters of the time will have to spent on professional development. Expenses, such as accommodation, will have to be paid by the participant or the employer.
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The reform is part of the wider move to crack down on so-called ''soft dollar'' benefits to financial planners and planning firms by fund managers, insurers and other providers to encourage them to sell their products. The proposed ban comes into effect from the middle of next year. Naturally, the financial-planning groups have always denied that the overseas trips are rewards for selling lots of the groups' financial products. But the nature of many of the trips - reward and recognition for generating revenue - cannot be denied. The planning firms like to emphasise they themselves are paying for their planners to attend offshore conferences but it is well known that fund managers and insurers help pay for the trips.
All this, of course, has been seen through by the government, which is why offshore ''training'' conferences, with the exception of New Zealand, will be banned. It has been a long time coming. Back in 2004, the Australian Securities and Investments Commission issued a report showing how soft-dollar benefits in the financial-planning industry, including offshore conferences, were really about providing incentives to financial planners to sell more products. The best advice is not always the advice to invest in a financial product. Instead of gearing in the sharemarket using managed funds, the better strategy may be to pay down the mortgage and reduce other debts.
Each year, the top salespeople of financial products and their spouses jet off for ''education and training'' at destinations not known as centres of financial excellence. Monte Carlo, St Petersburg, Hawaii, Las Vegas, Cambodia and other exotic locations have been some of the favoured destinations. But at long last, if the government's proposed ban on overseas trips becomes law, the worldwide financial-planner discovery tours with the six-course dinners and tours of local attractions will be a thing of the past.
These reward trips always had a ''training'' component, though that may have been nothing more than an afternoon session with a motivational speaker. And that may only be so the firms paying for the trips can demonstrate a training component to the Tax Office so the expenses can be claimed as a tax deduction. We are not talking about those selling cars or toasters but financial planners who advise people on their life savings. Sometimes the reward holidays are not paid for by the planners' employers but by product providers such as fund managers. Some planning firms have increased the training component so the only time to relax over a three-day event will be an afternoon of golf.
But under the government's draft legislation for its Future of Financial Advice reforms, training of financial planners will have to be conducted in Australia and New Zealand and three-quarters of the time will have to spent on professional development. Expenses, such as accommodation, will have to be paid by the participant or the employer.
Advertisement: Story continues below
The reform is part of the wider move to crack down on so-called ''soft dollar'' benefits to financial planners and planning firms by fund managers, insurers and other providers to encourage them to sell their products. The proposed ban comes into effect from the middle of next year. Naturally, the financial-planning groups have always denied that the overseas trips are rewards for selling lots of the groups' financial products. But the nature of many of the trips - reward and recognition for generating revenue - cannot be denied. The planning firms like to emphasise they themselves are paying for their planners to attend offshore conferences but it is well known that fund managers and insurers help pay for the trips.
All this, of course, has been seen through by the government, which is why offshore ''training'' conferences, with the exception of New Zealand, will be banned. It has been a long time coming. Back in 2004, the Australian Securities and Investments Commission issued a report showing how soft-dollar benefits in the financial-planning industry, including offshore conferences, were really about providing incentives to financial planners to sell more products. The best advice is not always the advice to invest in a financial product. Instead of gearing in the sharemarket using managed funds, the better strategy may be to pay down the mortgage and reduce other debts.
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