Remuneration on group life insurance

Certain remuneration paid to advisers in relation to group life insurance provided through Super Wrap and Super Accelerator has been subject to grandfathering since 2014. This includes:

• Ongoing remuneration paid in relation to upfront fee arrangements on insurance established before 30 June 2014.
• Ongoing remuneration paid in relation to hybrid fee arrangements on insurance established before 30 June 2014.
• Ongoing flat fee arrangements on insurance established up until 31 January 2014.

We will cease paying this remuneration from 1 January 2021. When payment of this remuneration ceases, premiums paid by impacted clients will be reduced to reflect the removal of the adviser remuneration.

Please note that since 31 January 2014 we have provided the option for clients to pay their adviser an ongoing fee for advice (called 'member advice fee – insurance'). This is a % based fee of up to 25% of the premium, paid on the basis of a clear direction given by the client, and is paid for advice provided to them. We will continue to pay these fees based on arrangements made after 31 January 2014, however we expect that such fees will be subject to annual renewal and opt-in.

You can transition clients to new insurance fee arrangements or cancel existing remuneration arrangements before 1 January 2021. Where you provide ongoing advice about insurance to your client, new fee arrangements could include the implementation of an ongoing member advice fee – insurance, with the agreement of your client. 

A list of your clients for which grandfathered insurance remuneration is currently being paid is available from us. To cancel remuneration arrangements immediately, you can complete a schedule and return it to us. To transition clients to a new insurance fee arrangement your clients can complete an insurance advice fee instruction form.

Note that this impacts Group Insurance in superannuation only. Adviser remuneration on LifeWRAP insurance policies (often referred to as 'retail' policies) is not paid via Netwealth and is not included in Netwealth remuneration arrangements.

Asset-based fees on borrowed amounts

From 30 June 2013, asset-based advice fees cannot be charged on amounts that have been borrowed by the client and invested in Investment Wrap or Wealth Accelerator. Asset-based fees established before 30 June 2013 may have included fees paid in relation to borrowed amounts and been subject to grandfathering. From 1 January 2021, where we know that the client has borrowed money to invest in the Wrap Service, we will cease to pay any asset-based advice fees calculated based on the borrowed amount.

A list of your clients for which we understand there to be borrowed amounts on which grandfathered fees are being paid is available from us. To change the fee arrangements, your clients can complete a change of advice fees form.

Note that we are not necessarily aware that investments have been funded by borrowed amounts. Where you are aware that an amount invested in the Wrap Service is sourced from borrowed money, you may wish to consider whether your current fee arrangements can continue.

New advice fee options and functionality

We are currently reviewing the forms of advice fees we make available for advisers and their clients, in consultation with licensees and advisers. 

We expect that most of the currently available ongoing advice fee options will continue to apply.  These ongoing fees will be subject to annual disclosure and renewal by clients.  We are actively working to update functionality to assist advisers with fee disclosures and renewal, however we await finalisation of legislative requirements and ASIC guidance before completing this work.

We are currently developing a new form of advice fee that will operate for fixed terms of less than 12 months.  This will enable advisers to agree fees with clients as part of their regular review process, without the need to issue fee disclosure statements and annual renewal/opt-in.  This is something that we have been asked for and will be operational from around 1 January 2021.

Netwealth account administration fees

On 1 March 2020 we introduced new account fees for Super Accelerator and Wealth Accelerator. At that time we advised you and your clients that from 1 January 2021 the new account fees will apply to all existing accounts. 

To achieve this for our older products, Investment Wrap and Super Wrap, the accounts will be converted to Accelerator Plus accounts and the Accelerator Plus fees will apply.  There will be no change to the benefits provided to clients or the functionality of the clients’ accounts as a result of this change.

Your clients have the option to transition to this new fee structure before 1 January 2021.  This can be done using our online fee transition tool or your clients can complete a change of account fees form.

The option to convert earlier provides you with the opportunity to restructure your remuneration arrangements in consultation with your clients and enables you and your clients to take advantage of the new fee structures available through our Accelerator products sooner if appropriate.