Dealer groups have begun lifting the fees they charge advisers by as much as 30 per cent to cover off both increased costs and the loss of revenue they know will flow from some of the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Association of Financial Advisers (AFA) chief executive, Phil Kewin pointed to the increased dealer group adviser fees as yet another issue confronting members as they sought to deal with an end to grandfathered commissions and the costs associated with the new Financial Adviser Standards and Ethics Authority (FASEA) regime.
He said the increases were just adding to the cost burden being imposed on advisers.
Infocus Wealth Management managing director, Darren Steinhardt confirmed that his firm had increased its adviser fees by around 30 per cent, although the amount was variable depending upon the scale of an adviser’s business.
He said the increase reflected an increase in basic costs but acknowledged that it also reflected the reality of what would happen to platform fee rebates and sponsorships as a result of the Royal Commission.
Former dealer group chief executive, Paul Harding-Davis confirmed the scale of the adviser fee rises and the fact that they would be variable according to the scale of an adviser’s business.
The increase in dealer group fees has also been portrayed against the background of the almost certain removal of grandfathered commissions having fundamentally undermined business valuations.
Stories are circulating about advisers who purchased books of business 15 months ago for multiples of 3.7 times for life insurance clients and 2.5 times for fee-for-service clients having to settle for 2.5 times life and 1.5 times fees.
Comments
This is exactly why dealerships need to look at what services they will provide to advisers going forward. The day of the big head office with all these different departments is gone. We advisers really need choice, we need new dealerships to enter this market to shake it up.
Well, as a Director of an AFS Licensee, we have had to deal with the new ASIC levy of $1,000 per adviser.
So if you have 50 advisers the Licence is up for $50,000 additional running costs that have never been budgeted for.
And ASIC expects each AFSL being solvent and able to pay their bills whilst screwing the tripe out of each and every one.
We don't know what the regulator/government intends in the future to impose on Licensees and their advisers but clearly, those costs have to shared, otherwise we all go out of business.
Perhaps that's the long term agenda.
Now that the big players such as Banks and Insurance companies are divorcing themselves from the wealth management business, what a great exit plan.
Everyone just goes out the backdoor.
This is what you get when you allow ignorant, inept and incompetent politicians to run their agendas.
The public don't count, many advisers despite in the past prior to 2003 having adequate education don't count with the introduction of FASEA
As one adviser put it, if there are only 30.0% of the adviser that survive all of this deliberate culling are left, I will be able to charge whatever I like to provide financial advice.
The assumption is that those with plenty of dough will be willing to part with it. I suspect that many of those people didn't build up their wealth on the basis that they would be willing to part with much of it, in the first place.
New AFSL Fees up $40,000 for us, we have 2 ARs.
This is well beyond justifiable thus self licensing beckons. A profit and survival grab obviously to account for lost volume rebates.
No one knows if demand for advice will increase or when ... thus literacy continues to decline
At least the CFP is finally recognised for 2 units of FASEA education
$40k. That’s cheap for 2 AR’s. Careful you get what you pay for.
Also self licensing is becoming high risk in the current compliance environment. I wouldn’t go near that at the moment.
Btw I’m an adviser not a dealer group head so we pay too, and a hell of a lot more than $40k
Your ‘economy’ of self licensing might turn out to be very expensive if you are not careful.
Maybe Darren might just have to sell his Porsche.
Very childish Joe Blow. Haven't heard a comment like that since high school.
very good! He must not see clients. I was always taught no matter how well you are doing or in what industry, do not turn up to a fee paying client in a Mercedes or Porsche! Be humble.
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