Licensees lifting adviser fees, but who has most at stake?
Who is holding the whip hand as financial planning dealer groups seek to increase their adviser fees – the licensees or the advisers?
That is the question being asked as licensees seek to position their pricing to reflect the end of adviser subsidies which came in the form of volume rebates and other forms of grandfathered remuneration, which will come to an end this year.
According to dealer group documentation seen by Money Management, advice practices are being asked to accommodate fee increases of between 10% and 50% prompting them to examine what, precisely, is being delivered by the licensees and whether it represents value for money.
In one instance, the dealer group increased its fees for a financial adviser working within an aligned practice by 11% to $26,400 plus 3.3% of revenue.
Another dealer group’s documentation pointed to adviser fees rising from $32,000 for a one authorised representative (AR) firm in 2020 to $45,000 for the same AR next year.
One dealer group executive told Money Management that the end of grandfathering had irrevocably changed the commercial models of many licensees with the result that financial advisers would need to adapt to a user-pays approach.
However, another said that the increases would prompt many financial advisers to weigh up what it was they were paying for and whether they could get it cheaper elsewhere with the Financial Planning Association (FPA) and education group, Kaplan, just as effective at monitoring continuing professional development as the licensee.
“I think there are going to be questions about what the licensees are offering for their fees and whether some elements of their service offering can be unbundled,” he said.
The increase in dealer group fees and charges comes at the same as the FPA has canvassed individual adviser registration and a change of role for licensees in terms of providing authorisations.
Recommended for you
Three of Australia’s largest financial advice groups have shared their thoughts with Money Management on whether they would include crypto on their approved product lists.
Shadow treasurer Angus Taylor has vowed to introduce a bill to legislate a raft of financial services reforms if the Coalition is elected.
Money Management examines the share price of financial advice licensees over one year to 31 March, with M&A actions in the final quarter having a positive effect for two licensees.
A $3.5 million settlement for victims of Melissa Caddick has been approved by the Federal Court following an initial agreement last December.
