Appearing on the latest episode of The ifa Show, Tribeca Financial chief executive Ryan Watson argued that while the advice profession has seen some improvements in recent years, advisers should consider the ways in which they provide value to their clients.
“I do question whether the advice profession has changed as much as we’d all like to think. Without judgement, I’m not sure that it has … and that’s genuinely a concern,” Watson said.
He explained that the way some advisers choose to charge fees goes against his firm’s ethos and the way he perceives the value of advice services.
“I understand that every profession, whether it be accounting, law and the like, there’s always a few bad eggs and it doesn’t need to spoil the whole thing,” Watson said.
“The penchant for percentage-based fees and a lot of advice to still seek value, arguably perceived value, in complicated investment portfolios, whereas it’s diametrically opposed to how we do things at Tribeca and where we truly see the value.”
Watson questioned the extent of change the advice profession has undergone, asking: “How much are we really changing and growing and leaning into what’s truly client centric, and are we really challenging ourselves around adding value to clients or are we still trading in perceived value?
“We reserve the right that people can run their businesses their way. I think my concern still sits a lot in trading on complex investment portfolios. The challenge would be, do they really add value?”
Watson explained that while he’s not suggesting the profession has returned to pre-royal commission misbehaviour, he is concerned that advisers are leaning on this “perceived value as opposed to clear, transparent, dollar-based fees, value being presented in multiples of the fees that are charged”.
Further, he said advisers need to be sure that clients are understanding the information and services being provided to them, “the goals they have, the strategies that’s being implemented, and how they’ll be put in a better position both short, medium and long term”.
He added: “I think there’s still an open opportunity for us as a profession around that.”
While advisers intrinsically understand the value of the service they provide, Watson said that there needs to be further consideration around how clients are perceiving that value.
“Us as a profession, we know we add a lot of value, whether that be qualitative or quantitative. How do we continue, and I use this term lightly, how do we continue to sell that proposition to the Australian public?” Watson said.
“Because good advisers add a hell of a lot of value to their clients, a lot of sleep at night, a lot of security, a lot of freedom of choice, and four to six times value, and the independent research says that.”
Watson suggested advisers try and view their service from a client perspective to better understand what they are providing their clients with.
“If you’re a client in the seat, what would you want from an adviser? And I dare say it leans more to the qualitative side, the being heard, speaking less, and continuing to ensure that you can demonstrate a lot of added value to clients,” he said.
To hear more from Ryan Watson, tune in here.
Whether you charge a percentage based fee or I charge coconuts, whether you only use index funds in a managed discretionary account outsourced to the Directors to get a discounted platform fee or avoid doing ROA’s compared to another adviser…does it really matter so long as the client is happy, and obtaining their goals. Someone’s been drinking the inhouse cool aide a little bit too much and attending the inhouse brainwash training sessions too long.
There is no such thing as “perceived value”. “Value”, is in the eye of the beholder.
There is no quantifiable measure of value, it’s qualitative and relative.
So please get off your high horse Ryan and stop implying that your firm charges fair fees but other firms who charge via different models perhaps do not.
Seen a couple of Tribeca client SOAs and their “flat fees” are extremely high. And funnily enough flat fees always gets higher when the balance gets higher…
As he said I respect his view that he can his business however he likes, but there is no real link between professionalism and flat fees. Charge how you like as long as the client is happy and aware and give good advice.
Dollar-based fees he said, not flat fees. He didn’t imply all clients are charged the same. He said the fee relates to the value being provided to the client, so not necessarily the balance they have.