"Proposed ban eliminates private provision by authorities"
In a significant shift, two political parties, The Greens and The Left, have proposed the abolition of commission-based financial advice, aiming to replace it with fee-based advice. This move, if implemented, could have far-reaching implications for the financial landscape of the country.
Under the new system, citizens would pay either based on the effort put into their advice or a flat rate directly to the advisor. However, critics argue that this could limit the freedom of choice for citizens, particularly those with lower incomes, as fee-based advice is often more expensive.
Fee-based advice requires immediate payment and is subject to VAT, unlike commission-based advice. This could disproportionately affect low-income earners, who are most in need of advice that is not readily available online. The lack of affordable advisory services could lead to many citizens feeling disgruntled, potentially leaving existential risks unsecured.
The Greens and Left party also advocate for a state monopoly on old-age provision, care, and health, which could mean the end for around 250,000 intermediaries. This shift could further exacerbate the scarcity of affordable advisory services, particularly in light of the decline in bank branches and the shrinkage in the advisory offer.
The Left party also wants to strengthen the responsibility of consumer centers in advisory matters, while The Greens propose a collaboration with the industry to develop a legal fee order. However, these plans receive little praise from Michael Heuser, scientific director of DIVA, who has criticized the abolition of commission-based advice.
Online financial advice can be overwhelming due to a jungle of offers, advertising, and comparison portals, and lacks support in prioritizing and individually dimensioning financial products. The proposed system is similar to the payment methods for lawyers and tax advisors, but critics question if it's a "hidden agenda" to abolish private provision.
The sharp decline in bank branches and the switch from commission-based to fee-based advice could lead to a scarcity of advisory services, particularly for low-income earners. The political party most critical of the announced abolition of fee-based advice, as viewed by Michael Heuser, Scientific Director of the German Institute for Wealth Formation and Retirement Provision, was not explicitly named in the available search results.
As the proposed changes to the financial advice system continue to unfold, it is crucial to consider the potential impact on citizens, particularly those with lower incomes, and ensure that affordable and accessible advisory services remain a priority.
