In an upcoming episode of The ifa Show podcast, 9ROK managing director Kim Payne said while the transition could create administrative challenges for advisers, it could also be an opportunity to look at new, more flexible models such as tailoring service levels on an annual basis.
“The way we are as consumers is we’ve got so much choice – we can buy the big Foxtel package that has every program under the sun, or we get the basics where we can record TV shows and maybe access some different things,” Ms Payne said.
“It’s that way of thinking that advisers are starting to adopt really well – they’re offering different levels where the client can choose the amount of accessibility, and they’re offering that from the beginning or offering it at a certain point in time.
“For instance the first 12 months, this is what [the service] looks like, and from 12 months onwards you can choose what level of service you want.”
Ms Payne said by adopting a subscription model with different levels of service and personalisation, and the freedom to change service levels every year, advisers could better demonstrate value to clients.
“It means if I’m having a conversation with [the client] every year, I’m looking at what offer I can bring to the table over the next 12 months, knowing that in 12 months’ time we’re going to sit down and look at it again,” she said.
“What advisers are able to say to clients is over the next 12 months these are the options we’ve got – A, B, C – [and] you might be on option B, but then at the end of the 12 months we’ll have a look at it and it might not be what you need. Maybe you’re going to need more depending what’s going on in your life, but maybe you’ll need less.”
While this model could create new challenges for advisers from a revenue forecasting perspective, it could also boost client retention and engagement, Ms Payne said.
“You can’t forecast out what your ongoing revenue is as you could in the past, but if you do this right, each year if the client really understands the value they are going to get from the relationship they have and how you’re going to look after them, they are going to pay the money,” she said.
“That’s a good thing because advisers genuinely are valuable and I think there’s always been a disconnect between how valuable they are and what clients experience in terms of value, so that’s why over the years you’ve had clients not wanting to commit to ongoing service.
“As long as the adviser steps up to the plate and helps the client understand that value, that’s been a brilliant change that the whole industry move towards annual agreements has really brought to the table.”
who still watches Foxtel?
More waffle from another hanger on, who has never chased down an Opt In renewal in his life. If the client is paying $5,000 pa, annual fee renewals may be all fine & dandy, but if they are paying $500 pa, the likelihood you will get anything re-signed during a Covid19 crisis is next to nil.
Interesting to note that the CBA has sacked all of their internal retail advice clients this week, and will only deal with Wholesale clients (who they conveniently don’t have to chase up Opt-In fee renewals for).
If there are 1000 advisers (FPA voting members) who can be paid handsome salaries & BONUSES, [without having to chase up any on-going opt in renewals from those fund members, with no informed consent provided for the ongoing advice fees charged, and no way for those fund members to Opt out of those fees], then a strong case can be established to reverse Opt-In fee legislation [unfairly impacting retail personal advisers] to Opt-Out with the annual Fee disclosure statement.
Interesting point re CBA’s transition to wholesale only. This is part of a broader trend. With regulators making professional financial advice ever harder to deliver, they have succeeded in pushing banks, super funds, and insurers into the regulatory gaps. Banks have seized on the regulatory gap that allows “wholesale” client advice with few of the usual consumer protections. Super funds and insurers are exploiting the gap that allows them to provide “general” advice via unlicensed sales staff who are not subject to BID or the FASEA Code. All this is on top of the long standing non enforcement approach regulators have taken in relation to unlicensed SMSF advice by accountants.
The net result of the relentless persecution campaign against licensed financial advisers is that consumers are being pushed towards far worse advice sources with far fewer protections.
And Industry Super continue to charge EVERY MEMBER Adviser fees when 95% of members dont get advice.
Adviser fees OPT-in ? what’s that says Industry Super.
Adviser Fees for no Service ? nope not heard of that either.
Absolutely theft on grand scale approved by the regulators for their Industry Fund buddies whilst they continue to strangle the life out of real Advisers.
Level playing field ASIC – ever heard of that ?