Finding the right value for financial advice
Finding an appropriate pricing model has emerged as a key concern for advisers attending the Boutique Financial Planning Principals Group conference in Brisbane.
Key concerns raised by delegates in an open session included: justifying an asset-based fee, justifying an hourly rate; placing a value on advice; assessing the costs of providing advice; separating price from product; and how much pricing emphasis to place on initial versus ongoing advice.
More than half of the 80-odd delegates indicated asset-based fees were a part of their overall pricing structure. Benefits included that clients were happy with this model due to the alignment of interest. One concern raised was it becomes hard to reassure clients and provide the extra time and service they expect in the event of a serious market downturn.
One delegate said asset-based fees also become an issue when clients move into the pension phase and begin drawing down assets, while another delegate said she lets clients choose a fixed or asset-based payment structure, but places a minimum level under each.
Placing a value on advice - particularly initial advice - and how to charge this while still trying to build ongoing business, proved a contentious issue.
It's hard to compete with larger groups and institutions who tend to provide initial consultations free of charge if you charge up front, and Quantum Financial Services principal Tim Mackay suggested explaining to clients how much the session costs - for example, $440 including GST for a one hour meeting - but telling the client the business will absorb the cost of that meeting. That way, they will place a higher value on that advice, he said.
People tend to use price as an indicator of quality, and more expensive advice has a higher implied quality, one delegate said.
Recommended for you
BT is to launch a new low-cost “Focus” investment menu for its Panorama platform this October, in partnership with Vanguard, seeking to compete with industry superannuation funds.
Net gains of financial advisers have already doubled since the start of FY25, according to this week’s Padua Wealth Data, with momentum gathering pace far faster than the previous financial year.
National advice firm MiQ Private Wealth has appointed a new chief executive to lead the business through a “transformative era” after penning a partnership deal with AZ NGA earlier this month.
WT Financial’s managing director, Keith Cullen, believes the firm’s Hubco model with Merchant Wealth Partners will be a “repeatable growth model” for the business as it scales its adviser numbers.
