Mark Rantall
Many clients are reluctant to give up commission-based arrangements with their financial advisers, according to fee-for-service dealer group GodfreyPembroke.
The dealer group has clarified its financial adviser remuneration model by explaining that existing clients can still opt for commissions and that the majority do.
The MLC-owned business’ managing director Mark Rantall told Money Management that while existing clients have been encouraged to transfer across to fee-for-service, he believes the majority are happy with their current arrangement and don’t want to change.
However, from October last year, fee-for-service has become the only option available to new clients.
According to Rantall, this flexible approach has seen an increase in client numbers as well as no clients lost.
“A number of clients have rung up on the basis we operate on a fee-for-service basis and have been attracted to that model,” he said.
“Also, the feedback we’re getting is that clients are comforted by the fact that when they are offered these investments they are totally transparent and they are able to understand what the adviser is paid and what they get for what they pay, and they have control over that transaction.”
Rantall added that adviser attitudes towards the change have also been positive.
“This initiative was predominately an adviser-driven initiative, so we did it as a collective rather than dictating it from the head office environment,” he said.
“We have lost no advisers over it — in fact, I think it has put us in good stead because, as far as I’m aware, we are the only institutional licensee on a national basis that has mandated fee-for-service.”
Rantall explained that a primary reason for moving the dealer group across to a fee-for-service model was to differentiate itself from its competitors.
“A number of our constituents believe in operating on a fee-for-service basis for two reasons. Firstly, it’s totally transparent in terms of the fees that are charged to clients. And, secondly, it allows the clients to have control over the transaction, so if a client chooses not to receive advice in the future then they have control over turning that fee off, whereas with a trailing commission they don’t have control over that.”
Godfrey Pembroke advisers are monitored by an audit process to ensure they are adhering to the company-wide remuneration standard.
