Cash incentives skew professionalism
Dealer groups who actively solicit advisers to move dealer groups through cash incentives won’t survive in “the new world” of industry professionalism, according to Pinnacle Practice.
Director Anne Fuchs said that licensees that are looking to build funds under management (FUM) by handing out cash to advisers are unsettling the overall stability of the industry.
“If advisers are unhappy with their licensee, they will come to that conclusion in their own time,” Ms Fuchs said. “Encouraging them to shop the business around to the highest bidder does not reflect the professionalism we are all working towards.”
“If RSVP or eHarmony started running marketing campaigns targeting married couples to explore whether the grass is greener on the other side of the fence, people would be outraged and rightly so.”
“A business model that solicits financial planning firms and encourages them to shop their business around to the highest bidder is exactly the same in principle,” she added.
Ms Fuchs said licensees that pay for a FUM transition are likely to be looking towards an agency-type model.
Instead, she said quality dealer groups with clear value proposition will succeed under the new professional fee for service arrangements.
“The decision on which dealer group is right for an adviser comes down to a complete review of a short-list of potentials to ensure they are aligned with business needs,” Ms Fuchs said.
“It is also worth remembering that like all things in life, advisers will get what they pay for.”
What is the value of an adviser?
A new report has dived into the value of advisers and found that they deliver va...
Expect industry overhaul: FPA
Financial planning is set to have a revamp, the Financial Planning Association o...
Industry needs to speak the language of women
The adviser industry still has work to do in finding a way to speak the language...