The head of the Financial Planning Standards Board has called for greater transparency, particularly in the way wealth management professionals are being paid.
Wading into the fees-versus-commissions debate being fought among wealth-management professionals in Hong Kong, the board's CEO Noel Maye said the focus should be on whether consumers were given adequate disclosure about how their investment advisers were being paid, rather than whether one remuneration method was better than another.
In Hong Kong, the typical practice is for financial planners to receive a commission from the products they sell. This is unlike other parts of the world, such as the United States, where it has become increasingly popular for advisers to be paid on the advice given, or as a percentage of the portfolio they manage.
Calling for the sector to increase transparency, he said it was more important to empower the consumer with information about how much financial planners were being paid, how the payment was determined, and whether they had any conflicts of interest. It should be then up to the consumer to decide whether they were comfortable with a particular method.
'If the consumer says 'I am fine with paying a commission, I can see how much I am paying, and I can see where I am going', I don't want to be the one saying you can't,' Mr Maye said.
He said it was also important for payment terms to be clearly written when consumers dealt with financial planners. 'I think, as a profession, we need to step out into the light,' he said.