Of Australia’s Top 100 financial planning dealer groups, only 19 offer clients the option of paying for advice on a fee-for-service basis.
With commission-based remuneration still dominating the popularity stakes with financial planners, those groups that do not take a commission, or a cut of ongoing trails, are finding the transition into the advent of choice to be just another day in the office.
Take Melbourne-based Grosvenor Securities as an example. With a staff of 58, about 80 per cent of its planners’ pockets are filled through the fee-for-service model.
But Grosvenor director Dennis Munari, said offering fee-for-service as opposed to commission-based planning does not seamlessly equate to an infiltration of the post-choice pool of industry fund members.
“There’s going to be a lot of dealerships and a lot of advisers who won’t want to get involved in the choice of funds type of business because they probably won’t see it as being profitable,“ he said.
“There’s a lot of work involved to get in and establish a relationship with a lot of these groups and for not a lot of result, unless, of course, you can look at it and say I’m going to have access to 50,000 members now and hopefully it becomes more of a prospecting tool.”
Meanwhile, to Centrestone Wealth Advisory, the only group in Australia which operates purely on a fee basis, there is no difference in industry funds compared to retail funds.
“If it’s a fee-based financial planner, really, super choice is just an investment choice where you charge the client a fee and rebate the commission. To me it’s just so blindly obvious that’s what financial planners should be doing I have trouble arguing it,” chief executive Rob Keavney said.
Centrestone currently has an offering from the industry fund Asset Super on its books, but Kevaney says there was some adjustment required to get it on the list.
“With Asset Super, we had to ask them to put their product on Morningstar’s qualitative data feed. Our data that goes to financial planners comes off that feed, so for us to produce a report to our clients, they needed to make changes to some of their business practices,” Keavney said.
And while the overwhelming majority of industry funds joined via an employer has been reported to be up to 50 per cent cheaper than retail offerings, client awareness of fees is only set to grow. The day where advisers are selected upon the basis of their relationship with the industry fund sector could be closer than many retail dealer groups expect.
Industry Fund Services general manager David Haynes applauds such a shift towards fee transparency.
“One might say now, the emperor has no clothes.”
