Bring in fees, but keep them flexible: Consultum

The financial services industry must preserve the freedom to choose the fee-for-service model they use in their remuneration structure if they want to keep financial advice affordable, according to the head of dealer group Consultum, Stuart Abley.

Speaking to Money Management, Abley said while he believed that the financial planning industry should move to a fee-for-service model, it was important that both financial planners and clients were able to choose the type of fee-for-service model in their remuneration structure.

Abley mentioned asset-based fees, hourly rates and flat fixed service fees as examples of acceptable fee-for-service remuneration structures.

Abley warned that if clients and planners weren’t given the choice of fee-for-service model, financial advice could become unaffordable.

“You can’t dictate which fee is better for us all. If you just went down an hourly rate, as opposed to a fixed rate or an asset-based fee rate, it could become quite expensive for the client,” Abley said.

“Many planners tell me that some of their clients can’t afford their fixed fees or hourly rate fees, and they would prefer that their client’s fund is debited accordingly [for their financial advice],” Abley said.

“What gives people in the industry the right to determine that you can’t go down that path?”

At the end of the day, three clients with all three different fee-for-service models could be serviced by their financial planner, Abley said.

Abley said he believed that the choice of fee-for-service structure would eventually be made available to financial planners.