Actuaries Rice Warner has clarified statements made by a client comparing fee-for-service financial advice offered by superannuation funds and commission-based financial planning.

The company compiled a report for Industry Super Network (ISN), which issued a media release saying Australians who pay for financial advice by commissions could be paying as much as 13 times too much.

“There are many vocal critics of the conflicts of interest inherent in the antiquated commission system,” ISN Executive Manager David Whiteley said. “This research reveals for the first time that fee-for-service advice is more cost-effective than commission-based advice.”

Mr Whiteley called for an immediate abolition of sales commissions and the introduction of a “best interests” test for financial advice.

But Rice Warner says the report it prepared for ISN was an analysis of fee-based advice delivered through the Industry Fund Financial Planning (IFFP) dealer group.

“Not surprisingly, it showed that their model of fee-for-service advice is provided more cost-effectively than advice that a member could purchase from a commissioned adviser in the open marketplace,” Rice Warner said.

“Those traditional planners dealing with the high-net worth segment will continue to advise individuals and families with complex financial structures. These clients are likely to continue to use holistic advice and they will negotiate a suitable fee as they would with any other professional adviser.

“In our opinion, both groups can survive side by side. However, it is clear that Australians needing financial advice should first call their superannuation fund, as they are likely to receive a valuable service at a very reasonable price.”