Financial advisors in the UK and Australia will soon be barred from accepting commissions. That’s led many experts in the U.S. to say America will follow suit. Is that true?
I listened to a really smat advisor today who said that the U.S. lags British and Australian regulatory systems by about five years and he predicted the commission ban would become the law of the land here in the next few years. I have my doubts.
As of January 2013, the Financial Services Authority in the UK will ban commission remuneration for the sale of financial products. The Brits have concluded that nearly every financial scandal has been the product of commission remuneration. A similar ban on commissions
becomes effective July 2012 in Australia.
The U.S. does not have the Socialist history of the U.K. and Australia is a fraction (one-fifteenth) of the size of the U.S. market.
America’s 401(k) system is driven by free market rules. That’s not how retirement works in the UK’s pension system, which requires a 12.8% annual employer contribution, or Australia’s superannuation system, which requires a 9% annual contribution from employers.
The approach to investing, business, retirement and regulation is a lot different in the U.S. than in the U.K. or Australia.
The laissez faire approach of the U.S. is not the preferred method of other countries. Just look at our healthcare system versus most other nations.
I’m not convinced the ban on commissions being predicted by some is a good bet, much less the sure thing some are saying it is.