The Federal Government ban on advisory commissions from 2012 will prevent financial advisers being a “leech” on their clients, an actuaries’ conference heard last week.

Australian Unity-employed actuary Andrew McKee told the Institute of Actuaries of Australia Financial Forum some clients of bundled products may pay for advice without receiving any because bundled products include the cost of advice in the product.

“They may understandably feel financial advisers are an unnecessary additional burden on their savings – a burden they haven’t actually chosen,” he said.

He says the impending ban on commissions will provide added impetus for manufacturers to develop products with unbundled fee arrangements.

“The Government reforms banning commissions from July 1 2012 will ensure advice remuneration is clear and that consumers have the ability to turn on or turn off advice,” he said.

“People will either get value from their adviser, or they will stop paying them.”

Mr McKee estimates the financial planning industry earns total recurring revenue – such as trail commission and asset-based fees – of between $1-1.5 billion a year, excluding commissions on risk insurance.