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.
AUTHOR
Staff Writer
Recommended for you
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”.
Sequoia Financial Group has seen a top-level reshuffle as the chair of the board, John Larsen, steps down after five years in the position.
As statements of advice move into the rear-view mirror, Vital Business Partners explores how financial advisers are adopting innovative documentation strategies.
Adviser Ratings has explored whether there is a financial benefit to advice firms seeking to have a specialised client base in terms of client assets and fees charged.
