Financial advisers in dark on advice provision cost
As the industry moves towards a fee-for-service model, financial advisers need to better understand their service costs per client and adopt scaled advice solutions to service lower-end customers, according to Provisio Technologies director Cameron O'Sullivan.
O'Sullivan said retaining C and D clients would continue to be a challenge for advisers unless the cost of advice could be lowered.
"Cost of advice is becoming more important as planners and dealer groups consider new models for remaining profitable in a fee-for-service era," O'Sullivan said.
Investment Trends 2011 Planner Business Model report found that 54 per cent of the 1396 financial planners surveyed said the biggest challenge they faced under the Future of Financial Advice legislation was providing advice affordable to lower-balance clients.
O'Sullivan said most planning practices had likely supported their lower-balance clients with their higher-balance individuals and "would become only marginally profitable" if they suddenly lost those clients.
He added that it was crucial for practices to adopt better solutions to service low- to -mid value clients, most of whom prefer receiving basic advice rather than traditional high-cost and time-consuming statements of advice.
"Advisers who embrace newer scaled advice solutions will be able to generate these basic plans in as little as a few minutes, dramatically lowering the cost of advice," O'Sullivan said.
Recommended for you
AMP has agreed in principle to settle an advice and insurance class action that commenced in 2020 related to historic commission payment activity.
Financial advisers will have to pay around $10.4 million of the impending $47.3 million CSLR special levy but Treasury has expanded the remit to also include super fund trustees and other retail-facing sub-sectors.
While social media can have positive financial influence, the overwhelming risks signal a greater need for affordable advice as Australians continue to seek financial education on social media.
Fitzpatricks Advice Partners has released a guide on building a national advice firm with the argument that these firms are crucial to facilitating growth in the struggling profession.
