The financial advice industry has come in for a lot of criticism on the remuneration front. FoFA aims to stamp out commissions and conflicts of interest in providing advice to consumers, and a number of surveys would suggest that advisers are actively moving towards a fee-for-advice model.
A recent Elixir Consulting report, for example, found that financial advisers are using a hybrid of flat and asset-based fees first – but gradually shifting to a full flat fee model. Interestingly, many advisers who are either accelerating their business evolution or starting to address the issue of fees would not do so had they not been compelled to.
The report also found that clients appreciate the shift towards a fee-for-service model, with 86 per cent of advisers finding that their offer was accepted by more than 90 per cent of the clients they presented it to.
Good advice does not necessarily come cheap, so advisers need to have confidence in the quality of advice they provide. With the shift towards fee-for-advice models, quantifying and communicating your value proposition is critical in getting clients to understand and pay for advice in a post-FoFA world.
