"Proposed ban eliminates possibility of private services"

The Greens, SPD, and Left Party have put forth a proposal to abolish commission-based financial advice, aiming to replace it with a fee-based system. This move, if implemented, could significantly impact the financial advisory sector, potentially leading to the end of an entire profession, as around 250,000 intermediaries could lose their income base.

Michael Heuser, the scientific director of the German Institute for Asset Accumulation and Old-Age Provision (DIVA), has been critiquing the pension reform plans of several political parties, including the Greens, SPD, Left Party, Union, and FDP. However, according to Heuser, the parties' plans for the abolition of commission-based financial advice lack clarity regarding how they intend to replace these fees.

Online, consumers face a complex landscape of offers, advertising, and comparison portals, with little support in prioritizing and correctly dimensioning financial products. The proposed shift from commission-based to fee-based advice could lead to a decline in affordable advisory offerings, particularly affecting low-income earners who are most dependent on advice.

Citizens would have to pay either based on the consultation effort or a flat-rate directly to the consultant under the new fee-based system. A concern is that fees due immediately and in one sum could burden the customer's liquidity, especially for income-weak citizens. Moreover, advice that is not available online could lead many citizens to become disillusioned, potentially leaving existential risks unsecured.

The Left Party wants to strengthen the responsibility of consumer centers in advisory matters, while the Greens and Left Party plan to develop a legal fee order in collaboration with consumer centers and the industry. The core argument of supporters of fee-based advice is consumer protection, but it may not be the primary goal.

VAT of 19% has to be paid on fees, while commissions are tax-free. Under the proposed plans, citizens receiving financial advice would have less freedom of choice in their advisors. The sharp decline in bank branches is causing the advisory offering to shrink, further fuelling the need for a change in the system.

Michael Heuser's pension reform plans critique does not favour the proposals of the Greens and Left Party, as their proposals do not meet his approval. The debate continues, with both sides presenting their arguments for and against the proposed changes in the financial advisory sector.