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 the final tally for FY25 now confirmed, how many advisers left during the financial year and how does it compare to the previous year?
HUB24 has appointed Matt Willis from Vanguard as an executive general manager of platform growth to strengthen the platform’s relationships with industry stakeholders.
Investment manager Drummond Capital Partners has announced a raft of adviser-focused updates, including a practice growth division, relaunched manager research capabilities, and a passive model portfolio suite.
When it comes to M&A activity, the share of financial buyers such as private equity firms in Australia fell from 67 per cent to 12 per cent in the last financial year.
