What is Grandfathering?
In the context of Financial Planning in Australia, Grandfathering is most commonly a provision in which the old rules about commissions continue to apply to some existing clients while a new rule will apply to all future cases. As of 1st July 2013, commissions paid from investment products directly to advisers were banned. They were called ‘conflicted remuneration’. But if you had investments in place before 1st July 2013, the commissions may still be being paid from your investment to the adviser, even if you don’t even know who the adviser is and haven’t seen them for years.
So, if you have a super account, or an investment that has been in place since before 1 July 2013 it’s very likely that you are paying extra fees which would be against the law if you opened the account now. And obviously, these fees (called ‘trails’) are significantly eroding your returns each and every year.
As a result of the recent Royal Commission, the government is moving to ban these grandfathered commissions but not until 2021.
At Swift we receive zero trailing commissions on investment products and we have zero ‘grandfathered’ clients, and we never have at any time in the past. All of our income for managing investments is paid to us directly from our clients and only our clients. We have only one master, and it’s our client!
Get a Second Opinion on your financial strategy
If you would like to have a discussion about your financial plan, or a ‘second opinion’ on your current investments or strategy, please don’t hesitate to contact me. I would be only too pleased to have an obligation free chat with you.