Asset-based fees not an easy fix
|
|
Switching from commissions-based remuneration to flat fees can be a “huge mental shift” for some advisers, but Elixir Consulting managing director Sue Viskovic warns that asset-based fees may not be the best option.
Her comments follow research from Investment Trends that identified asset-based fee-for-service as the fastest growing area over the last few years.
“Many [advisers] are now commenting that if they’re going to do all the work required to move to fee-for-service they may as well do it completely — especially if there is some risk that asset-based fees may be out of favour in future,” Viskovic said.
Elixir consulting reported seeing a trend that advisers who are new to the industry and those who have already been charging asset-based fees for some time are more likely to think in terms of flat fees when discussing fee-for-service.
“The recent changes announced by the Government will not only force many advisers to change their remuneration methods, but they will have to be very clear on their business models and their value offering to clients,” she said.
Viskovic added that asset-based fees are more appropriate where a business provides a genuine value-add in the area of asset management in addition to strategic advice.
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.
