Planners brace for the reality of a flat fee for service world
Flat fee for service with, perhaps, some life/risk commissions will be the dominant remuneration regime for financial planners after grandfathering is switched off in 2021, according to a Money Management survey.
The survey has also confirmed that most planners believe there is little or no likelihood of asset-based fees passing muster under any new regulatory regime, with survey respondents not factoring them into their future plans.
The survey, conducted in the days following the Government’s announcement that it would be backing the switch-off of grandfathered commissions in 2021, has confirmed the likely exodus of up to 30 per cent of planners.
However, it suggests that those leaving the industry will be, in the main, mostly older planners with significant books of trails and who have decided against pursuing further academic qualifications within the Financial Adviser Standards and Ethics Authority (FASEA) regime.
Importantly, the survey has revealed that the switching off of grandfathering alone is not the major contributor to the departure of older planners but, rather, the combination of both the FASEA regime and an end to trailing commissions.
The Money Management survey has revealed that a significant number of advisers have had little or no reliance on grandfathered commissions and that more than half already have well-established fee for service regimes.
For nearly 50 per cent of the survey respondents, grandfathered commissions represented less than 10 per cent of their turnover, with a further 20 per cent suggesting that it represented less than 30 per cent of their turnover.
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