Tiered advice is the future

As consumer interest and demand for financial advice widens demographically the industry could move to a tiered advice structure, Fidelity Investments vice chairman Robert Pozen says.

Opening the IFSA 2001 conference with a plenary session on recent US developments in saving and investing for retirement, Pozen also noted along with the widening customer base, the level of product choice consumers face and the need for good service.

“With the penetration of wider segments of society and consumer appetite for advice, the industry will have to have tiered advice,” he says.

The development of tiered advice will mean greater focus for financial planners and an increase in specialisation.

“There could be a proliferation of different types of planners,” Pozen says.

The critical point will be the level of assets under management with planners recognising their areas of value.

“The biggest difference will be on customized advice for the higher end and standardized for the lower end,” Pozen says.

He says the internet will play an important role at the lower end, providing menu selection tools for standard procedures at low cost. For clients at the higher end a greater level of service will continue to be demanded.

Pozen also identified the growing trend in the US. He says open architecture platforms will be the key area for the US as well global market, and Australia will follow.

“Australia will have to move to open architecture, the trend is so strong,” he says.