Life/risk specialists contemplating charging fees rather than commissions amid industry reforms must demonstrate their value as an adviser and their thought process behind charging fees, a risk specialist said.
Estate planning advice firm, Succession Planning founding director, Adam Smith, said that while he began his career in 1996, he began charging fees in 2006, albeit a very small rate of $300, plus the goods and services tax (GST).
“I’ve spent probably a good part of the last four years trying to find risk advisers around the country positioning fees and it’s been a struggle,” he told a focus session at the Association of Financial Advisers 2015 National Adviser Conference in Cairns.
“For me it was massive because I’ve grown up on commission. When you’ve grown up on commission starting a fee is hard.”
However, he said switching to fees became very easy once he could demonstrate value and justify the process behind it.
While he was initially tempted to discount fees, he eventually charged the full amount, and said nine out of 10 clients stayed with him.
Smith said he ventured into estate planning about five years ago, adding it was an extension of the risk advice conversation.
“I was able to convey the value, I was able to demonstrate how I could help people and charging a fee for estate planning came second nature,” Smith said.
“Last year was the first time in my career where we actually generated more fees in new business income than we did in risk commissions,” he said, adding that estate planning was a natural fit for risk advisers.
