Advisers facing costs pincer
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.
Recommended for you
It can be extremely hard to realise the gains from financial advice M&A, according to Peloton Partners’ Rob Jones, and more could be gained from firms looking inward at their own practice.
With platforms reporting their quarterly results, there is a clear divide in the adviser markets they are targeting, according to platform specialist Recep Peker, and which would be right for your clients.
The Federal Court has imposed a $10 million penalty on Macquarie Bank for failing to prevent and control unauthorised fee transactions by third parties including financial advisers.
A financial advice firm has seen a weekly decline of 10 advisers, with all moving to a new licensee, while Centrepoint Alliance continues its “growth story”.
