Planners facing bad debt challenges
Virtually all planners may be ready to handle the new Future of Financial Advice (FOFA) changes but too few are ready to handle chasing clients who won't pay their bills, according to Leading Minds Academy principal Brian Boggs.
Commenting on a recent debate among advisers about what they should do when clients refuse to pay their bills, Boggs said this represented a manifestation of the switch from commissions to fee for service.
"Under the old commissions regime, an adviser's greatest fear might be that for some reason your commissions did not get paid. Under the FOFA regime and fee for service there is the reality of small planning practices having to manage debtors," he said.
Boggs said that advisers were now having to act in the same manner as accountants and lawyers in learning to spell out the terms of their engagement and how to bill their clients.
"The problem is that some advisers have yet to entirely learn than lesson," he said.
Discussion around providing financial advice and chasing bad debts was prompted by recent comments by a Perth-based adviser who sought opinions on how to handle a client who had refused to pay for his advice.
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