AMP Financial Planning and Hillross are well on their way to meeting the July 1 deadline for the transition to fee-for-service but there have been challenges, according to AMP Financial Planning director of advice solutions Steve Helmich.
He said one of the main challenges was helping financial planners understand clearly how they could articulate their value proposition to their clients.
“This is about changing mindsets, focus and behaviours – so it’s not just about sending out information that we’ll be moving to fee-for-service and this is how you do it,” he said.
Helmich agreed that communicating the value of advice in dollar terms is another challenge they have to face.
“There will always be the challenge of one-off advice,” he said. “But otherwise many will make it quite simple by having tiers of service and letting the client pick from those. At any stage, if a client wants to scale up and down, that is exactly what the system should allow.”
Helmich said the main consideration in moving to what they consider to be a fee-for-service model is that the fee could not be set by the product manufacturer.
He explained that as each practice operated as its own individual business, planners would have the freedom to negotiate with each client.
“Not every client is the same and not every client wants the same level of interaction,” he said. “While we approve actual fee-for-service schedules, we will allow the actual contract between the planner and the client to be set by them. Some may set it around asset values because there’s an intrinsic interest aligned there. Others will look to flat fees.”
Helmich said as AMP planners work with a broad section of the community, from middle income-earners to high-net-worth people, from the cities to regional areas, they wanted to also ensure that the model works and that their services remain attractive across the board.
“So we’re looking very much at the value of what we provide and how the planner can do it in the most cost-effective manner,” Helmich said.
