A Victorian adviser has slammed Alan Kohler’s argument that financial advice is too expensive and believes clients should have the right to choose “which fee-hat fits best”.
Speaking to ifa, Brian Handley – who has been in the financial planning industry since 1988 with practices in Gippsland and Geelong – attacked what he called Mr Kohler’s “one size fits all socialist model”.
“Alan Kohler, in essence, is doing a Henry Ford – ‘You can have any colour you like, so long as it’s black’,” Mr Handley said.
“This is both arrogant and elitist,” he added.
Mr Handley’s remarks come after ifa published comments by Mr Kohler – from an editorial in The Australian – in which he argues that financial advice is "too expensive" due to over-regulation and simply “not worth it” for consumers.
However, Mr Handley believes clients often prefer a fund under advice (FUA) percentage model.
“Kohler specifically argues that linking adviser service fees to a percentage of FUA is basically a rort,” he said.
“My experience is clients typically prefer the FUA percentage model in lieu of being asked to pay higher upfront fees under the direct fee model.”
Mr Handley argues this also gives clients greater control over fees.
“If the adviser is not providing quality service, the client can turn off the ASF and go somewhere else,” he said.
“The FUA percentage model also makes advice more affordable for working class people and is more akin to paying off the fee over a period of a year. The fee is typically more evenly spread rather than front-end loaded like the direct fee model typically is.”
With more than 20 years in the industry, Mr Handley said he had seen “tenfold cost/benefit ratios” by employing the FUA percentage model.
“If and when fund balances rise, both parties win,” he said, before adding a direct swipe at Mr Kohler.
“Clients are not stupid, Mr Kohler, they don’t stay the course for over 20 years if the value is not there and they certainly don’t refer others to your business.”
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