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Fee disclosure a ‘dark cloud’

Fee disclosure statements are causing more headaches in practice than any other FOFA requirement, according to the latest Investment Trends adviser survey. 

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