Dealer group pilots pricing menu
Mortgage Choice Financial Planning is currently piloting a pricing menu for its services in a bid to increase transparency and make financial planning accessible to more clients.
According to its general manager for financial planning, Tania Milne, the menu would include a list of services offered by financial advisers - such as superannuation consolidation, budgeting, life insurance advice and investment advice, among others - and a fixed price for each service.
"The idea is when the customer comes to speak with one of our advisers, that the adviser spends a lot of time in the first meeting working out what the customer's priorities and needs are," Milne said.
"Then they can help the customer identify or scope the advice to what the customer needs at that particular point in time," she said. "Through that process they sign the client engagement letter which includes the price attributable to that particular scope of advice."
Mortgage Choice Financial Planning does have the ability to provide holistic advice, but Milne said many Australians cannot afford it and would prefer to opt for a scaled service.
"So rather than sending them away with no advice at all, what we want to be able to do is make it accessible so they can tackle the bits that they need to tackle at that particular point in time," she said.
The pricing menu - which represents a relatively new pricing model - is part of the company's broader strategy to increase transparency in its offering, as well as broaden the market reach.
It comes as the financial planning industry as a whole puts more focus on efficiency and accessibility in light of the Future of Financial Advice reforms.
Investment Trends figures from September 2012 indicate consumers estimate the cost of financial advice to be between $400 and $700, which is in stark contrast to what planners claim would be the break-even cost of providing a full financial plan ($2350) and scaled advice ($1100).
The Federal Government indicated the main goal of the Future of Financial Advice reforms was increasing access to quality financial advice, hence its advocacy of scaled advice, both in terms of scope and price.
Managing director of Elixir Consulting, Sue Viskovic, said menu-type pricing models could be very effective, depending on their structure.
"It can be effective if they are a tool that's used to help advisers articulate a customised package that they're building for their client," Viskcovic said.
"But if they're planning to use it as a list for the client and letting them pick what they want, many clients won't know what is going to be more effective for them."
Mortgage Choice Financial Planning is a new company and the lack of legacy issues is making the launch of the new value proposition easier, Milne said.
However, Viskovic claims established financial planning businesses could easily adopt the pricing model.
"Established practices would be having conversations with their new clients and I don't think it'd be any different from someone that's never been in advice before," she said.
"But if it is an existing client they're rolling this new model to - that would be challenging."
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