The Financial Markets Authority (FMA) has sounded the alarm bells for the second time in two months over insurance companies providing soft commissions to financial advisers.The main form of remuneration for financial advisers who give advice on life and health insurance in New Zealand is commission. The commissions paid by insurers to advisers include monetary and non-monetary benefits. The use of non-monetary commissions, also known as soft commissions, is the concern here.Soft commissions are incentives or benefits such as gifts, prizes, trips, professional development such as training or software, events including conferences, sponsorships, payment of membership fees and loan to advisers.In the recent FMA report released last week showed nine life and health insurance companies spent $34 million over the past three years on soft commissions.It is very important to have an authorised financial adviser (AFA) by your side who is obliged to place the interests of their clients first.Stewart Group is an independent financial advisory business and introduced a "no soft commission" policy in 2003, which means we work for our clients' interest, not those of an insurance company.
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