Shaky Isles to be rocked by performance fees
GuardianTrust Financial Services has introduced a new performance-based fee structure for its financial planners in New Zealand.
Under the new ‘pay for performance’ structure, the planner’s fee is based on how well a client’s investments perform over time, and is calculated as a percentage of the actual return. If the portfolio does well, both client and planner share in the benefits. If it does badly, the planner reduces his or her fee accordingly.
Guardian Trust Financial Services national sales and marketing manager Tony Kinzett says the new performance-related financial planning fee, which was developed as a result of customer feedback, could shake up the industry.
“In a low-return environment, the spotlight has inevitably fallen on the fees financial planners charge for ongoing services,” he says.
Currently, Guardian Trust’s standard financial planning annual fee starts at 1.2 per cent and reduces for higher value portfolios.
Under the performance structure, clients pay a base fee of 0.5 per cent annually, plus 10 per cent of the actual return.
Kinzett says if a client’s portfolio returns five per cent, that person would, under pay for performance, be charged the base fee of 0.5 per cent plus a further 0.5 per cent (10 per cent of the portfolio return of five per cent), making a total annual fee of one per cent, compared to the normal 1.2 per cent.
If returns are negative, the client will be charged the base fee of 0.5 per cent and nothing else.
Recommended for you
With an advice M&A deal taking around six months to enact, two experts have shared their tips on how buyers and sellers can avoid “deal fatigue” and prevent potential deals from collapsing.
Several financial advisers have been shortlisted in the ninth annual Women in Finance Awards 2025, to be held on 14 November.
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
