One size doesn’t fit all with fee-for-service

Financial planners have been urged to make up a shortfall of data about their practices before switching to fee-for-service, according to Jason Gapps, national manager, practice and advice development at Securitor.

Speaking at the Association of Financial Advisers/Securitor Future of Financial Advice Masterclass in Melbourne, Gapps said financial planners needed to spend time collecting data to diagnose the circumstances of their practices before they prescribed a fee-for-service solution. Gapps also warned advisers should not try to “hammer” a one size fits all fee-for-service approach on top of their business.

“It’s not a criticism, it’s where we’re at in the lifecycle of our profession, but very few businesses have good quality data with which to make decisions,” Gapps said.

Very few businesses also have a clear idea on the profitability per client, he said.

“The data will influence the approach planners you with the business, is it a full review to pull it apart and put it back to together again, or is it tinkering at the edges?”

“Some businesses need to pull apart their whole value proposition, their pricing, their profitability and their service offering,” he said.

“I don’t see how you can take a one size fits all, hammer it over the top of every business and expect it to be as effective for every business. You have to know where you’re starting from, the model of [your] approach will be a function of where you’re starting from and where you want to go,” he said.

Planning practices also cannot expect to grandfather all their 500 inactive clients, and should expect to sell some of them off or work to make them active. Low cost providers will be targeting those sorts of clients at low cost, Gapps said.

He saw regularly in his channel of advice businesses with over 50 per cent of their clients inactive, Gapps said.