CEOs clear on adviser incentivisation
The fee for service versus commissions debate may well be over in the minds of chief executives within the Australian investment management industry, according to research to be presented to this week’s Investment and Financial Services Association conference on the Gold Coast.
The research, the Investment Management CEO Survey conducted by PriceWaterhouseCoopers, points to the majority of chief executives changing their “adviser incentivisation” model over the next few years, predominantly towards fee for service.
The research analysis said that when asked specifically about conflicts of interest, 43 per cent of respondents felt that the best way to minimise conflicts of interest was through proper disclosure.
Further, the survey found that 90 per cent of respondents with advice-based distribution businesses felt disclosure minimised conflicts of interest.
On the question of general costs within the financial services sector, the PWC research found that reductions in fee levels were generally expected across all wealth management services areas, with an expected reduction in the total cost to customers in the order of a further 10 to 15 basis points.
It said that one of the main drivers for this had been the disaggregation of the wealth management value chain and the shift in power from each supplier to their respective customers.
“For example, platform providers have exerted their significant buying power over asset managers,” it said.
The analysis said, however, that under the current environment, chief executives expected platform providers to come under most pressure while advice-based distribution was expected to be most resistant — “perhaps underscoring the importance and relative value of good financial advice”.
“As always, those providers that can best articulate and deliver value for money for their customers in terms of better returns, better service, more flexibility and/or better advice will be the most resistant to fee pressure,” the PWC research analysis said.
AUTHOR
Mike Taylor
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