All talk little action on remuneration
|
|
Australian financial planners might be talking the talk when it comes to how they bill their clients but that does not translate to walking the walk, according to new research conducted by Wealth Insights.
The Wealth Insights research reveals that while most financial planners are well aware of the media scrutiny being directed towards adviser remuneration and the likelihood of enforced change, the majority of planners are content with their current charging methods and do not anticipate any changes to what they are currently doing.
Asked what changes they anticipated making with respect to their fee structures over the next two years, 64 per cent of the planners surveyed by Wealth Insights said they did not envisage change, while a further 17 per cent indicated they would move to a predetermined fixed dollar amount and 12 per cent indicated they would move to asset-based fees.
Wealth Insights managing director Vanessa McMahon said amid the calls for self-reform of the way in which the planning industry charged for its services, the reality appeared to be that most planners did not envisage making changes in the near future and were content with their charging models. They were either continuing with the models that they had or were already making changes to the way they charged their clients.
She said the research, and associated focus groups, also suggested that a substantial portion of the financial planning industry was still commissions-driven.
“There are definitely people moving to asset-based fee structures but that creates its own problems in circumstances where some people are already arguing that asset-based fee structures are just a way of disguising commissions,” McMahon said.
She said the research indicated that while there had been a good deal of discussion around adviser remuneration and a general understanding that the regulatory environment was likely to change, many planners remained fixed in the commissions environment.
McMahon said the research, when taken together with sentiment being expressed during recent planner focus groups, suggested that the industry might witness an exodus of older planners if commissions were outlawed without significant grandfathering and if planner educational requirements were made more onerous.
“Most people acknowledge that commissions are on their way out, but there are those older advisers who have indicated that when it finally occurs they will be looking to exit the industry,” she said.
“When the phasing out of commissions is taken together with talk of the need for higher educational standards, there are those who say it represents too much change and effort and that they will sell their businesses and exit,” McMahon said.
AUTHOR
Mike Taylor
Recommended for you
The strategic partnership with Oaktree Capital and AZ NGA is likely to pave the way for overseas players looking to enter the Australian financial advice market, according to experts.
ASIC has cancelled a Sydney AFSL for failing to pay a $64,000 AFCA determination related to inappropriate advice, which then had to be paid by the CSLR.
Increasing revenue per client is a strategic priority for over half of financial advice businesses, a new report has found, with documented processes being a key way to achieving this.
The education provider has encouraged all financial advisers to avoid a “last-minute scramble” in meeting education requirements prior to the 31 December 2025 deadline.
