Fee disclosure statement requirements are necessary to rebuild the financial advice profession’s standing and industry fears are a “kneejerk reaction” to change, says a financial planning executive.
Speaking to ifa, Jim Mills, a director of Merit Planning Hills & Inner West – an authorised representative of Hayes Knight-aligned licensee Merit Wealth – said that the industry should be taking the FDS requirements on board, rather than shying away from the changes.
“I don’t understand why anyone would be scared to justify their fee to a client; the only reason that [advisers] would be is if they can’t justify it,” Mr Mills said.
“That might be the more knee-jerk reaction that the industry has had in regards to this.”
Mr Mills said that his practice has used the changes as a way to reiterate its value proposition to clients.
For advisers who are providing quality advice to their client base and can demonstrate it, Mills said FDS requirements will service to strengthen their business planning.
“If you’re running a practice where you’ve got a stack of clients you haven’t seen for ten years and you’re sending them this ongoing fee that they don’t even know about, then I can understand why [advisers] would be sweating about it,” he said.
“But if you’re providing value for clients, if you’ve got a good relationship with them then of course they’re paying for it.”
Mills said that the FDS requirements might go some way in showing the real value of advice for clients and provide a point of differentiation between them.
“What it might do is identify quality adviser business from the majority or the rest that don’t have that real relationship or existing communication with their client base; we’re massive supporters of it. It’s definitely a step in the right direction we think.”
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