Macro

I guess it is not surprising, because I have been repeatedly threatened by vested interests in the LIC/LIT debate with personal attacks unless I withdraw from it...And so it arrived: today a paid representative of the LIC/LIT lobby group LICAT, Dom McCormick, launched a crazy ad hominem assault on me to divert attention away from the public policy question of whether fund managers should be allowed to pay financial advisers large selling fees of between 1% and 3% to push their products to advisers' retail clients. 

For the avoidance of doubt, this should not be a heated debate. It has only become emotive, with lobbyists resorting to these desperate efforts, because there are literally hundreds of millions of dollars of adviser fees at stake, and billions of dollars of fund managers' enterprise value at risk. 

The truth is the debate was resolved ages ago by the establishment of the Future of Financial Advice (FOFA) laws, which banned all payments from fund managers to financial advisers in 2012. It was addressed again by the recent Banking Royal Commission, which strongly endorsed FOFA's intent (despite efforts by the Coalition to unwind it in 2014, which I aggressively battled at the time) and further recommended that all exceptions, such as the LIC/LIT exemption, to FOFA's ban on conflicted remuneration be removed over time. Paul Heath from the independent adviser Koda Capital put it best when he recently wrote in the AFR

"How can an adviser possibly serve the interests of both the fund manager and their client? Any payments of sales commissions to promote a product that contaminates clear-eyed and independent advice should be seen as just that. This sort of ‘advice’ is completely compromised and utterly incompatible with the intent of FOFA. Royal Commission? What Royal Commission? Commissioner Hayne made his view on this subject clear, commenting that “there must be recognition that conflicts of interest and conflicts between duty and interest should be eliminated rather than managed”."" Paul Heath, Koda Capital

The lengths Dom goes to tarnish me are extreme and petty. Apparently my AFR columns are "sycophantic", but given my willingness to enter into this debate has come at enormous personal and financial cost, it is not clear who I am ingratiating myself to. I must be doing the bidding of all those mums and dads who have no organised lobbyists to represent them! 

Dom concludes with an attack on my political preferences with the implication I am seeking to support the Coalition, and yet all my LIC/LIT commentary has been a full-frontal demolition of Coalition policy, as it was when I engaged in exactly the same criticisms over and over again in numerous AFR columns in 2014

By way of contrast, the Labor Party has enthusiastically backed the policy view that LICs/LITs should be captured by FOFA's consumer protections (as they were between 2012 and 2014 before the Coalition granted the exemption). Back in 2014 the Labor Party, Industry Super and I were all likewise joined at the hip when I resisted the Coalition's efforts to both roll-back FOFA's best interests duty and allow financial planners to receive conflicted selling fees for recommending in-house products.  

While it is commercially convenient for a paid lobbyist to attack me personally to muddy the debate, the problem is that most advisers and fund managers agree with the very simple proposition that FOFA should apply to all investment products irrespective of whether they are listed or unlisted. 

Are leading advisers like Koda Capital's Paul Heath and Will Hamilton (who has been appointed by the government to the Financial Adviser Standards and Ethics Authority board), respected researchers like Jason Coggins and Jerome Lander, LIC/LIT operators like Paul Moore at PM Capital and Hamish Douglass at Magellan, all likewise conflicted? I don't think so. 

These are simply folks who are willing to stick their necks out because they worry that fund managers paying advisers selling fees will gradually destroy the profound reforms legislated by FOFA and endorsed by the Royal Commission. Setting aside the almost certain mis-selling crises, it will create huge competitive dysfunctions between advisers who take commissions and those who do not, and between fund managers that pay these kick-backs and those who would rather just compete on their merits. As Jason Coggins asks:

 "Are we still debating the merits of conflict-free advice ten years after Storm Financial and six years after Banking Bad...Let’s be clear, this is not an anti-LIC/LIT crusade. It is calling out all conflicts. Conflicts can’t be ‘managed’. That’s an oxymoron. Yes, most try and do the right thing. But create the option to do the wrong thing and a minority will prioritise their self-interest ahead of others. The industry does not need lobbyists to tell us what is right or wrong. It’s simple: work actively (and only) for the client."  Jason Coggins

It is no surprise that we have seen different high yield debt LITs frozen---from PIMCO,CVC a---in the last week because of Treasurer Josh Frydenberg's review into the sector. But if, as some fund managers surprisingly claim, the 1.5% to 2% selling fees have no impact whatsoever on adviser recommendations and behaviour, why not offer these LITs with no sales commissions like all other unlisted funds, ETFs and even some LITs (eg, Magellan's recent offer) have done. Why not just compete on your merits? We all know the answer as to why selling fees are paid: because they allow fund managers to raise much more money.

The argument that funds should be able to pay advisers commissions of circa 1.5% to compensate advisers for the time they spend researching products is utterly specious. It contradicts the purpose of FOFA and the Royal Commission's conclusion that advisers should not be able to capture conflicted kick-backs (ie, they should only ever be paid by their clients, like accountants and lawyers). 

And this notion that advisers are "only" earning $200 is bogus. A typical adviser with ~200 clients might convert at least ~25% into an LIT if their firm is pushing it hard. If they get a ~1.5% selling fee, they will earn a huge $22,500 commission (given $30k/client). Leading LIC operator Paul Moore from PM Capital put it bluntly when he stated:

“When you have an anomaly in capital markets, it gets exploited and it only takes a few rogues to destroy the credibility of an industry where the vast majority of players are very conscious of their duties as custodians of other people’s money...There should be no payments allowed from fund managers to the distribution system...I fear—in fact I know—the risk-reward trade-off on many of these new LITs is not at all understood by retail investors (and many so-called “sophisticated” investors). Under the wrong market circumstances there could be real problems down the track—these new LITs could potentially be toxic time bombs" Paul Moore, PM Capital 

UPDATED: After I filed this piece, a reader highlighted that Dom actually appears to agree with my core criticism that conflicted selling fees paid by fund managers to advisers are driving retail flows into LICs/LITs. In October 2018, Dom wrote in Professional Planner:

"But perhaps the biggest factor in the popularity of these listed investment structures has been the ability of brokers, dealer groups and planners to earn ‘selling fees’ of 1-2 per cent as part of the IPO process. Financial planners have become a larger component of LIC initial public offerings in recent years, compared with the listings’ historical reliance on stockbrokers and direct investors. While the fees are not particularly large and some rebate them to clients, the ability to earn what are effectively commissions on listed fund IPOs is one of the more obvious Future of Financial Advice (FoFA) anomalies...It remains to be seen whether the selling fee anomaly will continue to exist, given the current focus on eliminating grandfathered and other previously excluded forms of conflicted remuneration. Greater scrutiny around, and possible elimination of, the ability of some to earn these selling fees following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry is one potential headwind for growth in the LIC/LIT sector. " Dom McCormick, October 2018

Writing in 2017 for the Portfolio Construction Forum, McCormick argued that one of the reasons Magellan’s new LIT would be “very successful” is because of the “the number of major brokers involved keen to earn a selling fee of 1.5 per cent (joint lead brokers receive an additional 1 per cent)” and the apparent problem that there was a “dearth of commission opportunities”.

Yet in 2020 this “mis-selling crisis is being grossly exaggerated”. It is not surprising to me that fund managers Magellan and VGI have both asked for their logos and associations to be withdrawn from the LICAT website...

The only thing that Dom of circa October 2018 and I appear to now disagree on is whether a selling fee of 1% to 2%---the same as what a real estate agent earns (although the agent typically only keeps half this fee) or more than what a mortgage broker captures---is a large fee or not. I believe any selling fees above say 0.25% are large enough to conflict financial advisers, especially when this selling fee is added to the other transaction fees, including arranger fees and manager fees, which can easily push it above 1%. The bottom line is that financial advisers should not be capturing any conflicted fees---they should only be paid by their clients.

I have written in detail about my long history with this public policy debate, starting in 2014, in this recent Linkedin post. Dom claims I am motivated to stop fund managers paying advisers selling fees because of my commercial conflicts. Some argued the same point in 2014 when we tried to stop the Coalition from rolling-back FOFA to virtually nothing (see one of my many 2014 columns on the subject here).  But what are these conflicts? 

We've repeatedly been offered the opportunity to do LICs/LITs (as recently in December 2019 I was approached by a top broker about this), but have chosen not to. My largest shareholder, Pinnacle, is a strong supporter of the LIC/LIT industry with three of its fund managers, Metrics, Antipodes and Spheria, having big LIC/LIT offerings. 

Neither my shareholder nor its fund managers are presumably delighted that I am calling for FOFA to be returned to its original 2012 state, and that could create nontrivial commercial problems for me personally. And then the 20% to 30% of brokers/advisers (mostly brokers) who take selling fees from fund managers are frustrated that I have taken this stand, and they have punished us by withdrawing their clients from our funds. Now layer on top of all of that personal attacks!

It would be much, much easier to sit on the sidelines, but I have never really done that on any issue since I began writing for newspapers almost 20 years ago. Only this morning I wrote to a leading LIC/LIT operator that is supportive of my position in the debate that, "I find it incredibly sad and dispiriting that so many very smart and talented people are happy to suppress what they know to be in their clients' best interests because they are commercially conflicted. I see this over and over again."

A final straw-man I am sometimes asked about is the hybrid market, to which our portfolios have a minority exposure. I've said this before and I will restate it again. First, I don't think financial advisers dealing with retail clients should take any conflicted sales commissions, whether they are paid for pushing an LIC/LIT, an equity IPO, or a bond/hybrid issue. It is all the same problem.

Second, I have explained that regulators overseas and here in Australia do distinguish between a productive company raising equity and debt/hybrid capital so that it can operate its business, where the standard regulatory practice is to allow sales commissions, and a fund manager paying a financial adviser a selling fee for a speculative investment product, which is often prohibited in the case of retail customers. 

Finally, hybrids are complex instruments, certainly more complex than cash or vanilla bonds, and beyond the comprehension of most mums and dads (though theoretically simpler than equities until they become one). I've made that point many times over the last decade.*** 

Returning to Dom's disappointing piece, which frankly makes me very sad, I will leave you with the completely unconflicted take of the respected asset consultant Jerome Lander, who was previously director of investment consulting at Russell and CIO of WorkCover:

"One of the worst articles I've ever read Dominic - in my dismay, I have tried calling you but not got through. I am shocked you would write an article like this attacking the person rather than sticking to the issues. The financial services industry would be much better if funds and advisers competed on a level playing field on their merits alone, and if financial industry participants could present what they believed was in the interests of clients instead of clamouring over the fast easy money (with no long term alignment) from raising LIC funds or from lobby groups. If those participants then choose to themselves work in alignment with these beliefs (which are also in alignment with client interests), then that should not be a surprise to anyone. Chris Joye has raised numerous excellent points about this issue and would quite obviously have been able to raise higher margin and more highly profitable LIC money should he have wanted to without any wrath from other industry participants . Furthermore, he is directly challenging Coalition policy and can hence hardly be considered a stooge for them. I don't believe Chris Joye is employed by any LIC lobby group nor does he benefit directly or indirectly from the large amounts of funds LICs have raised, as do the vast majority of people arguing in favour of keeping the commissions. Whether you like Chris Joye or not, I believe the way you have attacked him here - seemingly only because you are now employed by the lobby group and because he is the leading advocate of the other side of the debate (and not paid for by any lobby group) - is inappropriate and unprofessional in my view. It reflects poorly on you, the lobby group which has employed you and the fund managers that are funding that lobby group. I would be interested in knowing which fund managers are funding the lobby group?"

*** ASIC is introducing new Design and Distribution Obligation laws next year that will mean that issuers of hybrids will in all probability only be able to offer them to institutional and wholesale investors. We saw banks preparing for this with NAB's recent OTC hybrid issue that was only available to institutions. In truth, however, equities are ultimately the most complex securities a retail punter can ever be exposed to, but for some reason shares and margin lending against shares have been exempted from these new DDO rules, which seems extremely odd. Whereas there are an unlimited range of factors that can impact an individual company's earnings, a hybrid has a much more finite range of risks, albeit that they are still beyond most retail investors to come to terms with. So in the same way that high yield corporate loans have a role in retail portfolios (with their complex covenants and myriad idiosyncratic risks), so too do hybrids. But most retail punters should seek professional support when trying to manage these assets. 




David Thomas

Well done Christopher! More power to your pen.

Christopher Joye

Thanks David, it is just sad. I don't understand why people are not happy just debating ideas and keeping personal attacks out of it. I guess when their wallets are threatened, they are willing to cross that line :(

Wayne Leggett

Knowing Dom, as I do, this comes as a bit of a surprise. But, speaking of being surprised, I had no idea these payments even existed until the FPA asked for comment on the government plans to remove the exemption. IMO, the days of advisers being paid by a fund manager should be consigned to history.........unless we want to revert to being salespersons, rather than advisers.

Christopher Joye

Wayne, I agree completely! I came across Dom years ago, and always found him to be pleasant. And like you, I cannot believe we are still debating whether financial advisers can take sales commissions from fund managers to push their products to retail customers...And the fact that I have been arguing in favour of the removal of this exemption should not be controversial---I've been arguing the same point for more than five years...

Steve Bull

This one needs to be settled in one of those Corporate boxing matches.

JOEL WILLIAMS

Christopher, I don't see how the following is "a crazy ad hominem assault on me" and would be interested in you addressing it: "Some articles have targeted the “high management fees” on these credit LICs/LITs. Many unlisted funds also have high fees. Over 2019 the difference between gross and net returns on the Coolabah Capital/Smarter Money High Income Fund was 1.06% with the combined management/performance fee taking almost 24% off the 4.38% gross return for a net return of 3.32%. On the Coolabah/Smarter Money Long/Short Fund the difference between gross and net return was almost 3%, taking almost 30% off the gross return of 9.7% for a net return of 6.82%."

Christopher Joye

High or low fees and whether they are fair or not have absolutely nothing to do with the debate, which is whether fund managers should be able to pay financial advisers sales commissions to encourage advisers to push products to their clients...There is an independent debate about whether advisers who are receiving hefty kickbacks from fund managers to distribute their products are not as willing to negotiate fee discounts. I certainly know our advisers and insto investors are super aggressive in negotiating fee discounts off the headline rack rates that you have quoted. I have never heard of an LIC/LIT providing a fee discount, but maybe they do.

Max Riaz

Chris, you should start an association of fund managers, researchers, and advisors for unconflicted fees.

Christopher Joye

Yes, great idea if only to offer some balance to the awesomely well resourced and coordinated LIC/LIT lobby seeking to protect the sales commissions that they have to pay advisers to raise money. We could also represent all the faceless consumers that have no organised lobby.

Neal Dunne

Well written Chris. We are in the death throes of the previous regime and carve out such as those afforded to the LIC sector are not long for this world. The writing was on the wall with FOFA but unfortunately there are many who did not heed the warning back then, did not redefine their value proposition and were successful with their lobbying (often the same groups who purport to be industry leaders). As such we are now in the post royal commission world with inflated costs at every level of the chain with the main losers being the many Australians who will no longer be able to afford financial advice. It is also worth noting that the new FASEA code takes care of many of these structural deficiencies regardless of carve outs.

Christopher Joye

Hey Neale, thank you for your sage thoughts. The problem with the FASEA code is that the same vested interests are trying to dilute it down to allow the same loopholes...

Mr T

Livewire (James?) - well done and thankyou for publishing articles/ comments with differing points of view so readers can look at things from different angles. Dominic - thank you for publishing your article, I wonder if it required some courage to publish, and please continue to engage with Livewire. Chris, if 'you're gonna wear white, you're gonna get dirty!' (and boy it can hurt sometimes getting dirty, but keep your chin up!) 1. Please keep contributing to the AFR; it is always insightful and appreciated (and punters won't get access to your thoughts without this avenue) 2. I agree that, at it's most fundamental, there is clearly a conflict of interest with excessive stamping fees to sell product to punters. It makes sense to minimise or remove perverse incentives from any economic system (particularly where there is info asymmetry, ie sophisticated brokers etc vs punters) - so keep up the campaign 3. I note some people have had a go at your for fees etc in your funds. As I recall (with the exception of the HBRD ETF), your funds only accept money from insto or sophisticated investor clients - and this client group should obviously have the skills to understand your fee structure, so the personal comments around this were unreasonable and should be ignored. Again - keep your chin up, regards

Christopher Joye

thanks Mr T. i have no issue with Dom, and when I have met him in the past always found him to be really pleasant. and i think it seems we don't even really disagree on the issue i am raising here around conflicts of interest - at least based on his 2018 remarks.

Carlos Cobelas

very eloquently written as usual Mr Joye. Now if only you would lower the excessively high fees on your long/short credit and high income funds, I would invest some money in your funds. That is not a personal attack ! Cheers

Richard Murphy

I think its clear there's a need for the Treasury/ASIC review of the exemption to FOFA put in place for LITs/LICs after it was introduced. I first observed the potential effect of commissions well before FOFA when ASX (I'm a past employee) was hosting Australia's first ever "ETF" morning with State Street, S&P and Macquarie, just ahead of the imminent launch of STW, Australia's first ASX 200 ETF. Must have been early 2000s. 200 or so planners sat through ASX, State Street and S&P presos. Then Mac Bank (Cathy Kovacs I think it was) took the stage as the Donut was listing an instalment warrant over the ETF. The planners had lounged in their seats up to that point given it's not hard to get your head around an ETF. But when Cathy noted the warrant would have a commission attached, the whole room moved as 200 planners reached for their pens and note pads (millennials, that's how we used to record things when you were 5). At that stage I had no connection or knowledge of the managed fund/wealth management industry aside from working on listed stuff at ASX, so the impact of commissions and trails was new to me. State Street and BGI had observed that these remuneration structures would act as a major impediment to ETF development in Australia as they had done offshore. I had tried and failed to get ASX to officially weigh into the pre-FOFA debate in 98 on behalf of all listed products, as the core debate was actually going on as far back as then. All the early sales work for ETFs as a new asset class hit the brick wall of the commissions available on MFs. If you chart ETF volumes on ASX you'll note the change in the trend that occurred once FOFA was in place, putting ETFs on a level playing field with their MF cousins. Today advisers compare and contrast MFs with ETFs without the beer goggles of commissions playing a role. And as a result of FOFA (at least it was a major contributing factor among others in my view) there's now a smorgasbord of choice on ASX and now on Chi-X, which has to be a good thing for consumers. My failed "line" for Richard Humphry to adopt as CEO of ASX was that commissions and trails were a blight on the industry. I still can't get passed the core issue of two products with similar features having different sales profiles because one pays a commission and the other does not. If that's generally accepted as one of the rationales for FOFA then shouldn't this principle apply across the board? Chris is arguing on a matter of principle here and in the debate others need to show why that principle is either incorrect, or doesn't apply in certain circumstances, if such an argument stacks up.

Andrew Lockhart

Chris, We don’t really see the issue of the payment of selling fees and potential conflicted remuneration as our debate. Our position is that we have attempted to create investment choice for clients and a listed vehicle has been a means of creating investment liquidity in a less liquid private markets asset class. I note that Jonathan Rochford made this exact point ‘LICs / LITs are an appropriate structure for illiquid investments’ in his article published on 22/1. However, we have a range of concerns with the way this debate has unfolded and the lack of objective analysis. Unfortunately the debate is not nuanced and the unfortunate outcome of this is to potentially tarnish the reputations of others, both reputable fund managers and also professional, hard working and ethical Financial Advisers. I have obviously read much of the commentary which is unfortunately inflammatory. Articles that make comments such as ‘fund managers push complex listed investment products to retail clients,’ or ‘financial advisers accepting kick backs’ or ‘fund managers that are exploiting loopholes’ or there has been ‘an explosion in LICs/LITs, and illiquid high yield, or junk bond funds containing unrated loans and sub-investment grade debt’ or even the headlines such as ‘Listed funds could be ‘toxic time bombs.’ Unfortunately you probably do have to accept that when you write in such a manner it will cause others to question if you have another agenda given that you also operate a funds management business in competition for capital with others. The commentary also appears to have exaggerated the issue by combining the performance of certain listed vehicles with the all in costs associated with a listed fund (which are fully disclosed in a PDS) with the issue of potential conflicted remuneration paid to distribute a fund via Selling Fees. If the debate is to be focussed on the risk of misselling LIC and LIT investment products to investors then surely the same argument can be made for the potential misselling of other investment products such as direct equities, bonds, hybrids or the potential misselling of unlisted funds via platforms that might attempt to deny or restrict investor access to ‘approved products’. The debate shouldn’t be one about investment vehicle structure but rather on the risk of misselling of investment products. From our experience in issuing listed funds we have not experienced anything other than complete professionalism. Gaining market support from brokers, researchers, financial advisers and other service providers is not a straight forward easy process. As a product issuer seeking to deliver quality investment products for investors you must have a focus on the costs and seek to minimise these costs to ensure you have a commercially viable investment product. In fact, whilst we have had broad market support for our funds we have experienced situations where others have declined to invest or distribute our funds based on determining what is in the best interests and appropriate for client portfolios. We have no evidence that would suggest that anyone has been motivated to assist us to distribute our funds or recommended an investment in one of our funds based on the payment of a Selling Fee. In fact, the assessment is about risk, return, total costs deducted from investor returns, market liquidity, ASX liquidity risk, credit risk and the track record of Metrics in delivering for investors. That is, are our investment products appropriate for investors. We are comfortable in comparing our funds with any relevant listed or unlisted fund in terms of performance, risk, fees and costs and how the investment has performed for clients. The ASX listed nature of our funds and the required market disclosures are also a means of promoting market transparency and provides investors with a clear publicly disclosed means to compare investment products. We don’t profess to be experts on the performance of the entire LIC or LIT sector but we can speak about our own firm and the funds that we brought to the listed market being the MCP Master Income Trust (ASX:MXT) and the MCP Income Opportunities Trust (ASX:MOT). I note that in an article written by Graham Hand on 8th January 2020 he references comments by Anna Dawson a Senior Specialist Financial Advisers at ASIC. The comment states that ‘The initial carve-out was given because of an argument that companies would not be able to raise capital. The carve out was restricted to companies that ‘made things and provided services.’ As a business Metrics Credit Partners is in the business of making things and providing a service. Our business does two things (1) we have developed a range of investment products that provide investors with choice. Investors in funds managed by Metrics can determine what is their return objective, how much risk they are willing to accept and what is the best means for them to achieve this and what are the options available to them in managing the liquidity risk of their investment and (2) we provide a very important source of non-bank debt capital to assist companies to finance their business activities. We believe we are different to all other LICs and LITs that deal in public exchange traded securities. That is, we seek to build long term relationships with Australian corporates and directly originate opportunities to lend money. We negotiate these transactions, structure the financing and manage the risk associated with lending companies money. Investors cannot access our asset class via other exchange traded investment options. That is, we are not a passive investment company dealing in exchange traded assets. I do think we offer a different investment proposition and active management in terms of both origination and risk management is more akin to the activities undertaken within banks. We are not passive buy side investment analysts and any discussion with borrowers financed by our funds would confirm the performance of our team. As it relates to the actual performance of our two ASX listed investment trusts we make the following comments - The MCP Master Income Trust (ASX:MXT) was the first ASX listed fixed income / credit trust to list on the exchange back in October 2017. We have been very fortunate to have gained strong investor support. Since listing this fund we have delivered returns exceeding the minimum target (RBA Cash Rate + 3.25% pa), paid net cash income distributions to investors monthly, lowered the total costs to investors and actively managed risk to diversify the portfolio with average counterparty exposure currently c.1%. MXT continues to see increased daily traded liquidity and units have traded above the $2- Issue price everyday since inception. In April 2019 we completed the IPO of the MCP Income opportunities Trust (ASX:MOT) and were again very fortunate to have gained strong investor support. Since listing this fund we have delivered returns exceeding the minimum target (7% pa), improved the distribution terms so that investors are now paid net cash income distributions each month, lowered the total costs to investors via an agreement to waive our entitlement to performance fees as a result of reductions to the RBA cash rate and we have actively managed risk to diversify the portfolio. We have negotiated private market opportunities with several borrowers to also participate in equity performance of companies that we have lent to and MOT continues to see solid traded liquidity and units have traded above the $2- Issue price everyday since inception. All of the above has delivered an attractive investment choice for investors that were previously unable to obtain exposure to the asset class in a liquid / tradeable format. We are committed to continually seeking to deliver for our investors and providing a very important alternative source of finance for Australian companies. Regards Andrew

Matt Christensen

Chris, may your pen keep moving this debate forward, and to the more representative populace (i.e. people who pay/suffer from Stamping Fees; rather than those mostly employed on the back of Stamping Fees). Paul Heath who with Chris Joye has led this recent push for removing conflicts are both elevating the entire industry, whether we like it or not. Pretty soon, every investor with a $10 million+ asset pool, will be aware of the Conflict/dynamic on this issue, and how a conflicted stamping fee impedes objectivity. The HNW' 2021+ choice of Broker, Fund Manager, Adviser will impose a great cost on those who fight for the right to pay/receive conflicted stamping fees today. In the same way that the HNW abandoned Big-4 planners (spurning the boutiques of the last decade), the HNW too will abandon those who are today in anyway involved or supportive of Conflicted Stamping Fees. The regulatory arbitrage that LIC's and LIT's possess needs to go, NOT because it has necessarily been abused by the Issuers; and Andrew Lockhart highlights how shareholder friendly Metrics have been. It needs to go because conflicted stamping fees poison the mind of those involved. Stamping Fees are very powerful, as Richard Murphy's comments clearly attest to, and it is their effectiveness in raising FUM, that inspires the strong defence/arguments for status quo. But no-one defending Stamping Fees are answering the key questions Paul Heath and Chris Joye are asking! And pretty soon, all affluent and informed consumers will be asking tough questions about Conflicted Stamping Fees too. Thankyou Chris. Thankyou Paul.

Christopher Joye

Andrew, from Metrics, thank you for your thoughtful contributions. Matt Christensen, you are one of the smartest advisers we have ever come across, and thank you for your bold/brave observations...

Christopher Joye

And in more news... Labor will push a legislative amendment in Parliament to shut down a loophole that allows fund managers to pay commissions to stockbrokers and financial advisers for selling newly-floated listed investment funds. Shadow cabinet has agreed to the plan by Labor's financial services spokesman Stephen Jones, who is ramping up pressure on the government to immediately act in the middle of a Treasury consultation on the controversial debate... Forager Funds Management chief investment officer Steve Johnson, who operates an LIC, said there shouldn't even be a debate about stamping fees and listed investment products. "It should never have been allowed in the first place," he said. Mr Johnson said not all products that pay stamping fees are bad."But the easy way to avoid being guilty by association is to not pay stamping fees and let your product sell on its merits." https://www.afr.com/politics/federal/labor-tries-to-close...

Mark McLaughlan

Well said. These payments are tainted and I shouldn't have to wonder or worry about whether the advice I am paying for is conflicted.