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
Financial Services Minister, Stephen Jones, has assured the cost and time to enter the financial advice profession will soon be halved, as shadow treasurer Angus Taylor pledges to reach 30,000 advisers.
The positive results of the latest financial adviser exam have helped the advice profession reach 15,600 yet again, according to Wealth Data analysis.
Financial advice firms have told Adviser Ratings they are planning to increase their compliance spend by almost a third, including on enhancements to their cyber security which ASIC has identified as an enforcement priority.
The digital advice platform is officially launching into the financial advice sector, offering up its services to practices as a means of engaging with the next generation of clients.
