With the share market looking to correct itself over the course of the year, now is an ideal time for advisers to move clients across to a flat dollar fee and provide a level of service that reflects the fees paid.
“With some stability returning to the markets, it’s a great time to talk about the advantage of moving to a flat dollar fee,” Russell Investments’ head of advice capability, John Nolan, said.
“You might end up with three or four service levels, but it will be much easier for you and your staff to deliver on the stated level of service, and clients will know exactly what they are getting for their money.”
Mr Nolan said the biggest obstacle advisers face when it comes to providing a fee for advice is their own perception of the value of their services.
However, with clients still willing to pay for quality advice, it is important for advisers to look at the advice they are providing and attach a price that reflects it.
“Not only do you give yourself some revenue certainty, you are also making it explicitly clear to the client that you are not responsible for movements in the markets and should not be rewarded – or punished – when they inevitably move,” Mr Nolan said.
“Too many advisers were caught short when the global financial crisis hit and saw their client fees drop, ironically at the very time that they were working hardest for their clients and really earning every dollar that they made.”
