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Get your fair share of commission rebates
I am sure no consumer likes to pay commissions for the financial products we buy. Unfortunately, the financial product providers have no choice but to pay commissions to provide incentives for financial advisers to recommend their product. Last weekend, we had drinks with one of Kingsley’s good friends who works for a fund management company and he admitted that increasing commissions was one of the most effective ways of increasing sales. One of the reasons why we decided to have our own SMSF was because we did not like paying high fees and commissions for retail super funds. The government is also working on clamping down on commissions to be paid to financial advisers but in the mean time, there is something you can do to get back some of the trailing commissions that you may be paying for some of your existing financial products. Some of the financial products that frequently pay trailing commissions are:
- Managed Funds
- Superannuation
- Pensions & Annuities
- Master Trust & Wrap accounts
- Cash Management Trusts
- Margin loans
- Insurance policies
If you have one or more of the above products, you may be paying thousands of dollars in commissions over the years. I always wished I could get some of the commissions back (especially when the person who sold me the product is no longer providing me any value added services to justify the commissions paid) but did not know how to do it until I read about cash-back providers in Money magazine. The 2009 and 2010 winner for “The best rebate service provider” is a company called YourShare. I checked out their website (http://www.yourshare.com.au) and was surprised at how easy it is to get back my share of commission rebates. All I have to do is to fill out a Broker Nomination Form and appoint YourShare as the new broker for my existing products and they will do the rest. They will give you 50% of the first $590 of commissions rebate they get for you, and 100% of the rest. How good is that!
For us, we have always avoided unlisted managed funds because we know that there are a lot of fees and commissions included in the products. In this blog I have always advocated Exchange Traded Funds or ETFs (see May 6 post) which you can buy and sell directly on the stock exchange without incurring unnecessary entry and redemption fees. Unfortunately, ETFs are not very popular in Australia yet as most investors do not know about them. Their financial advisers are unlikely to recommend ETFs because they do not get paid commissions for them. However, we still spend quite a few thousand dollars each year on insurance (life, TPD, income protection) which is purchased with our SMSF and personal funds. In addition to the above products, you could also get commission rebates on other financial products and services like loans and mortgages, online broking, and other types of insurance like home and contents, car and travel insurance but to get these rebates, you may have to refinance your loans or take up new policies. If you are considering buying new financial products, make sure you check with YourShare first as you may be able to get a 100% rebate on entry fees, which could be costing you 4% or more.
If like me, you think this is great news and cannot wait to tell all your family and friends about it so they can save hundreds of dollars on commissions themselves, you can refer them to YourShare and if they decide to sign up, YourShare will thank you for your referral by giving you $50 for each person you refer, if their commission rebates exceed $250 per year. If you decide to sign up with YourShare after reading this, please put my name (Christina Bong) and my client code (YS21001) down on the Broker Nomination Form. It won’t cost you anything and any referral fees will help me offset the cost of running this blog. For more information about their referral program, check out http://www.yourshare.com.au/Referrals.aspx.
Start improving your returns on your investments by reducing the commissions you are paying for them TODAY!
Note: Image courtesy of Egilshay
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[...] No more trailing commissions for financial products. Most retail financial products like super funds, loans and insurance pay up front and trailing commissions to financial advisers who recommend these products to their clients. The government will ban trailing commissions from 2012 but this rule will only apply to new products only. Trailing commissions will still be paid on the current products that you have now. However, you don’t have to wait until 2012 or switch products as you can get a portion of these trailing commissions back today by switching your adviser to a commission rebate specialist like Yourshare. More details on how to do this can be found on my previous blog post Get your fair share of commission rebates. [...]
If you use yourshare, who will help you if there is a problem and you have to make a claim or if you need to review and update your insurance?
Good question Tim. For claims you would normally deal directly with the insurance company. If you need help to review your insurance needs, I would suggest paying to see a independent financial planner who does NOT get paid commissions from any particular insurance company. This way you can be sure he is recommending the best product for you and not the one that pays him the best commission. Once you have decided on the insurance product, Yourshare can help you purchase/update it and you will get a share of the commissions that are normally paid to brokers by the insurance company. Some of the commission you get back will go to paying for the financial advice but you will not be paying trailing commissions in the years to come. As we tend to have insurance for years, this can come up to a significant amount of savings over the years.
Christina