Financial planners might not like the proposed two-year ‘opt-in’ rule or so-called ‘dollar fee’ invoicing, but that is what most clients really want, according to a study conducted by MSI Global Alliance.
The MSI Global Alliance – which markets itself as one of the world’s leading international alliances of independent legal and accounting firms – has published the findings of a survey of 570 business owners which it says confirms pressure from clients for financial planners to move to charging time-based fees.
And while the survey outcome clearly contains some negative results, it also noted that planners were "the most trusted source of retirement planning advice".
On the fee for service question, the survey found that 68 per cent of participants want financial planners to charge a ‘dollar fee’ via a tax invoice for the number of hours work on their investment, with 22 per cent happy to be charged a percentage of funds under management.
Dealing with the two-year opt-in, the survey found that 66 per cent of respondents regarded it as a positive move, with just 14 per cent saying it was a backward step.
It suggested that while respondents agreed opt-in would impose higher costs on planners, nearly half believed the costs would not be significant.
Commenting on the survey results, MSI Global Alliance spokesman, Charles Hornor, said it had confirmed two things – that financial planners were the most trusted source of investment advice and that there was concern over what fee for service should really mean in practice.
"Clients are looking for value for money more than ever before, and they are saying that a dollar fee based on the time actually spent on their financial affairs is preferable to being charged a percentage of funds under management," he said.
