How to Stop Paying Trailing Commissions and Start Putting Them in Your Pocket

You may not have heard about trailing commissions before, but chances are there are some being generated in your name, and there is a way to have them refunded back to you. If you hold a life insurance policy, have a superannuation fund, an allocated pension account or an investment fund then there are trailing commissions being generated from some or all of those financial products and at the moment those commissions are probably being paid back to the advisor or provider who opened the account for you many years ago. Now, you can request a refund by registering now with Commission Rebates, and have your trailing commissions paid back into your pocket.

So, What Are Trailing Commissions Exactly?

Trailing commissions are generated on just about any financial product you can think of, and it is likely you already hold several of these products:

• Life insurance policies.
• Trauma insurance policies.
• Superannuation funds. 
• Allocated pension accounts. 
• Home loans. 
• Equipment financing. 
• Business banking finance products.
• Commercial property finance products. 
• Vehicle leases or chattel mortgages. 
• Real estate agent commissions.

That’s quite a list right? Now think about how you can benefit by having the commissions generated from those financial products paid back to you, have referral fees from those providers refunded to you, and have the entry fees on your investments terminated. So you want to know what sort of a refund we’re talking about?

On financial products like superannuation funds and investment accounts, there are often entry fees charged on contributions of around 4% of each deposit and when you register with Commission Rebates we will stop all entry fees being charged to you. Your super and investments are also generating trailing commissions and so too are your life insurance or trauma insurance polices. These commissions could be anywhere from 0.4 – 1.2% of the balance of your account, but we can make sure they are repaid to you. Even your home loan is generating trailing commissions, so does your bank need more money going towards their profits, or could you profit from the 0.15 – 0.20% of trailing commissions being generated?

On your business products, your bank or financial institution is likely to pay a referral fee to the accountant or advisor who introduces new commercial finance customers to them, and since the referral fee is being generated by your new business, we think you are entitled to receive the fee and we can make sure you get it. We can also help you get back a portion of the commission your real estate agent would pay as a referral fee for your business.

Trailing commissions are automatically generated and deducted from your investments to cover the cost of ongoing advice from a financial planner. However, even if you didn’t invest through a financial planner, you are still being charged fees for their services, to ensure that the prices of financial products remain the same. This is because financial planners are the main distributors of managed funds, and if the fund managers offered a cheaper price for the products if you go direct – because they are not deducting trailing commissions to pay advisors – it would upset the balance within the industry as the financial planners would be having their prices undercut. Therefore you can be fairly sure that no matter who advised you on your investment account or other financial products, trailing commissions are being generated and paid regardless.

How You can Receive Commission Rebate Refunds

Since all of these commissions and fees are being generated from your financial products, at Commission Rebates we believe you should be able to receive these back as a refund. Therefore, we have made the process swift and easy and you can request a refund by registering now. Once you are registered, Commission Rebates becomes the broker of your accounts and funds and so the trailing commissions are now paid to us. We in turn refund them to you.

Trailing commissions are generated and paid to the financial advisor or broker who opened each account for you, because they are supposed to be offering ongoing financial advice and assistance. However, since most people don’t hear from their finance broker after they have signed the last of the paperwork, we think you deserve a refund of the commissions being generated on your products.

The Future of Trailing Commissions in Australia

It is not only us here at Commission Rebates who believe you shouldn’t be paying for services you’re not necessarily receiving. The Financial Planning Association of Australia has said they want to work with the industry, to help facilitate a phase out of trailing commissions by 1 July 2012. Commission rebate services are one way the FPA sees of putting you back in control of your financial products. However, there are also suggestions on the table that financial planners and advisors outline their fees for their services clearly, and that those fees are paid directly by you, rather than automatically deducted or generated from your investment or account.

So what do you think?

Do you have a financial advisor or broker who contacts you regularly with advice and information? If so, are you happy for them to continue to receive the trailing commissions generated on your funds and accounts? Or should the fee structure for ongoing financial advice be negotiated directly with the advisor, and paid when a service is received, rather than in lieu of?

Or maybe you’re a broker or financial advisor who feels they do deserve the trailing commissions which are generated for the life of the product they sold – long after they have archived the file of the person they sold it to?

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Editor's Choice: Commission Rebate Service

Service	Details	Value of Rebate	Fees	Refund to You
iRefund Commission Refunds	The iRefund commission collection and refund service is a no-cost service. That is, iRefund will always be paying you, our members, the fees and commissions that we collect on your behalf. .	First $790	$395 (50%)	$395 (50%)
		Amount in excess of $790	$0 (0%)	$395+ (100%)
MyMoney Commission Refunds	Get all your trailing commissions rebated to you. There are no upfront fees charged, an annual fee is paid to MyMoney from the commissions refunded. There is no joining fee or member fee. So the service is free to you.	First $480	$240 (50%)	$240 (50%)
		Amount in excess of $480	$0 (0%)	$480+ (100%)

Example of the potential refund

Value of Investments	Average Rate	Commission	Annual Refund
$50,000	0.4%	$200.00	$100.00
$100,000	0.4%	$400.00	$200.00
$150,000	0.4%	$600.00	$360.00
$300,000	0.4%	$1,200.00	$960.00

Note: Commission rates will vary between investments and this table excludes any initial commissions or commissions on continuing contributions to your superannuation funds or other savings plans.