Aussie planners more adaptable to changing fee structures
Australian planners have successfully rebooted their fee strategies and revenue channels in line with financial sector reforms, unlike their UK counterparts who appear to have estranged the younger market in their move from commissions.
Such is the revelation in an Investment Trends report, which showed stark differences in the Australian and UK planner fee models, despite both regions going through similar financial sector reforms, via the Future of Financial Advice (FOFA) and the Retail Distribution Review (RDR).
The comparison shows that while Australian advisers have primarily replaced commissions with fixed fees for service, UK advisers have adopted an asset-based fee for service model.
As a consequence, UK advisers appear to be alienating the younger market, with just 22 per cent of clients aged below 50, compared to 36 per cent in Australia.
Investment Trends senior analyst Recep Peker said the comparison shows how the impact of adhering to what clients wants.
"Australian financial advisers successfully aligned their fee model to what clients were asking for. UK advisers haven't been as attuned to their clients' needs," he said.
Asset-based FFS comprise 52 per cent of practice revenue in the UK, compared to 30 per cent in Australia.
Australian advisers source 35 per cent of practice revenue from commissions, 30 per cent from asset based FFS and 29 per cent from fixed price FFS, on average.
The results were based on a survey of 1039 financial planners, published in the May 2014 Planner Business Model Report.
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