Most principals running financial advice offices are opposed to the ban on commissions, according to new Association of Financial Advisers (AFA) research.

Of those surveyed, 42.8% said they did not support the proposed ban on commissions while 36.1% said they strongly did. The rest said they didn’t have any views on the topic.

One principal interviewed for the survey says the reforms “will cause some pain as clients are reminded of the full cost of advice”.

Another argued low-value clients won’t be able to afford to pay for advice.

Other principals argued that removing commissions will enable the advice industry to be seen as a profession.

“It is important to have laws that ensure there is no conflict of interest if we ever want to become a profession,” a Queensland adviser said. “No one takes us seriously otherwise.” 

Many of the advisers polled say they want a ban on commission for investment products, but not for life insurance policies.

Even some principals and advisers who supported a ban on commission don’t want the reform applied to life insurance products, saying it will make the underinsurance problem worse.

The advisers surveyed say clients rate general insurance as more important than insuring their financial future.

AFA consumer research found they ranked home and contents, comprehensive car and medical insurance more important than life and income protection.

AFA CEO Richard Klipin says many advisers think the reforms will increase paperwork, drive up costs and undermine the nature of advice.

“A number of the proposals seem likely to have the unintended side-effect of making it more difficult for people to get financial advice,” he said.