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
TAL has introduced four new courses to its Risk Academy focused on ethical dilemmas as part of Ethics Month to help advisers meet their CPD requirements.
Unadvised Australians believe they need $2 million to retire comfortably, according to Colonial First State, a wide variance compared to advised individuals which estimate $1.3 million.
Financial advisers can now access Vanguard’s diversified managed account strategies on HUB24 and Netwealth, marking a “significant expansion” through new distribution channels.
The heads of two financial advice licensees have joined the board of the Financial Services Council as it looks to deepen its engagement with the space and strengthen its representation.