A ban on commissions paid to financial planners will reduce client costs and make advice more accessible to the public, according to an actuarial report.

The Federal Government’s announcement of an industry-wide ban on commissions has been welcomed by the industry’s peak body, the Financial Planners Association, and the findings of a new Rice Warner report confirm that while financial planners’ wages will suffer, their work volumes will increase as more people seek guidance on financial matters.

The Rice Warner report examines how the industry will shape up in the years following the removal of commissions. Its findings include a reduction in the cost of obtaining financial advice, a rise in the number of advisers giving “targeted advice” and a stabilisation of demand for “holistic” advice.

Financial planners’ total remuneration will be cut by $2.5 billion by 2024. However, remuneration will still rise at 2.3% a year over the next 14 years as demand for financial planning advice partially offsets loss in commission income.

“These changes, particularly the introduction of a fiduciary duty to act in a client’s best interests, are a necessary step towards establishing this occupation as a profession – for all advisers,” the report says.

“The changes will be beneficial for the superannuation industry with members now able to access limited advice on a cost-effective basis across a wide range, including retirement planning.”

Importantly, the changes will also open financial planning to people who haven’t previously sought specialist advice. Rice Warner says that currently only about 5% of people with income from $41,500 to $67,500 receive financial advice; this will increase to 15% by 2023.

“The vast majority of Australians currently receive no financial advice, but the changes will lead to far higher coverage and result in better insurance and retirement outcomes,” the report says.