Investment Trends’ survey of more than 1,000 financial advisers – culminating in newly released 2013 Planner Business Model Report – fee disclosure has taken over as the element of FOFA advisers are finding most challenging.
“In previous years’ studies planners were more concerned about opt-in and not being able to provide affordable advice to lower balance clients,” said Investment Trends senior analyst Recep Peker, reflecting on the report’s findings.
“They have now finally awoken to the administrative burden posed by the annual fee disclosure requirements, with the proportion citing this as a challenge jumping from 12 per cent last year to 48 per cent,” he added, describing FDS as a “dark cloud over sunny times”.
Concerns over the FDS requirement are in part caused by a lack of FOFA preparedness in general, Mr Peker said, with only 23 per cent of surveyed advisers indicating they were ready to administer fee disclosure statements two months out from FOFA implementation.
While advocacy of licensees was found to be increasing across the board – with Westpac-aligned Securitor achieving the highest net promoter score – the report suggests greater guidance on FDS requirements would further enhance dealer group satisfaction levels.
“There is still a great opportunity to help planners, with 70 per cent saying they would like their dealer group to help them with implementing FOFA changes,” Mr Peker said.
“Fee disclosure statement and other templates are at the top of their list, but they’re also calling for more education and further enhancements to their systems.”
Indeed, Securitor managing director Matt Englund told ifa that providing advisers with assistance on issues such as fee disclosure is one of the key factors in the dealer group’s strong score in the advocacy stakes.
“Operational execution around FOFA and the support for that has been a strong tenet of the value of the dealer group and our advisers are telling us that,” Mr Englund said. “Making sure they’ve got the systems in place in their business to align the FDS reporting [has] been crucial.”
The report’s findings confirm comments made by the Financial Planning Association recently that FDS was steadily becoming the key concern of the organisation’s members, along with uncertainty on the FOFA grandfathering provisions.
At a media briefing in Sydney last month, FPA chief executive Mark Rantall said that many members expressed they were struggling with FDS requirements at recent FPA events.
Recep Peker will be expanding on the report’s findings at the 13th annual Wraps, Platforms & Masterfunds Conference in the NSW Hunter Valley this week. Final tickets still available: http://masterfundsconference.com.au/#&panel1-1
Think carefully how grandfathered clients will respond if treated differently to fresh clients on full fee disclosure
Fair enough Phillip, I know what you meant….I was more making a point that in no way is an FDS beneficial to your business or the client. It is merely a legality, disclosing fees already disclosed is a duplication of work. Unproductive and costly to implement. Time would be better spent on portfolio theory, doing meaningful reviews and getting rid of outdated risk profiling methods, I,e, working in the clients interest,
Observer 101…What rubbish. Given that most Accountants and solicitors bill in arrears and on most occasions clients have no idea of the size of the bill coming this is just a rubbish comment. Having dealings with Accountants and solicitors on a daily basis I see no such upfront disclosure or yearly agreements on fees and mostly you reward inefficiency through charging based on hourly rates which is professionally immoral. Fortunately most people aren’t that thick.
Gerry, we did not do it to differentiate our service offering, we did it because it is law. I don’t agree with how the policy was finally implemented. 6 months work will allow us to press a button next year and produce FDSs in 5 minutes.
FDS is a joke, why would i want to know what i paid in the last 12 months, i want to know what i am paying today and going forward. Say i am not happy with the last 12 months do i get a refund
Public servants how have no idea about business reality.
Like other professional have a client fee agreement upfront on service level & fees and if any changes occur update your fess accordly, Its not that hard. I agree someting needed to be done, as advisor have been taking fees from clients accounts, but what should of happened was no grandfathering of comms etc, started on level playing fee. FP still has long way to go.
Good on you Phillip….but in case you think that somehow differentiates your service offering from the other planners out there…think again. Spending six months on preparation for a flawed policy requirement deserves no congratulations. Commiserations more likely.
We have sent our FDSs to all clients and do not have to concern ourselves with it until 30 July 2014! We did spend 6 months preparing for it and all the hard work paid off. Advisers knew it was coming and it is a legal requirement so it surprises me so many advisers are leaving it to the last minute (if at all)!
omg every other profession issues terms and conditions to clients on every assignment not just annually, ask any law firm, or accountancy practice….time to grow up boys and girls….if you want to be a profession do what it takes like all others !!!