Some support ASIC view on asset-based fees
The Australian Securities and Investments Commission (ASIC) advice within its new MoneySmart website urging consumers against using planners who charge asset-based fees has gained support among some planners and, not surprisingly, an industry fund.
A former Money Management Financial Planner of the Year and principal of Battistella Financial Services, Julian Battistella (pictured), said that in circumstances where his company had almost completed the move of all its clients from percentage-based fees to flat dollar fees, the position adopted by ASIC was interesting.
“It is interesting to note ASIC have today come out urging, “consumers to choose advisers offering ‘flat dollar’ fee arrangements over those offering fees based on ‘a percentage of assets’,” he said.
Battistella said the ASIC position confirmed his company’s view “that commissions and percentage based fees – when it comes to investments and superannuation – are an outdated business model”.
Battistella told Money Management that in addition to moving to flat dollar fees over 12 months ago for all new and existing clients, the company had been adopting what was essentially an opt-in model with its clients for years.
His comments came at the same time as the chief executive of big retail industry-based fund REST, Damian Hill, claimed the ASIC website was “highlighting to investors the downside of paying fees to professional advisers based on a percentage of assets”.
At the same time, he said his super fund would be advising Australians to always request an upfront assessment of what any financial advice would cost them.
“Keeping up with financial matters such as investing, superannuation, insurance, tax and social security can be difficult, so many Australians turn to financial advisers for assistance on these issues,” he said. “However financial advice can often be unexpectedly expensive. We would suggest anyone who is seeking advice request a written quote for what work will be undertaken and what the costs will be.”
AUTHOR
Mike Taylor
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