Many advisers aren’t charging their clients anywhere near enough for their efforts despite suggestions to the contrary from the Hayne royal commission, says the head of a non-aligned advice licensee.
In his outlook for 2019, Lifespan Financial Planning chief executive Eugene Ardino said that, in light of the coming changes following the final report of the Hayne royal commission, it is important for firms to review their client service package.
He added that it is more critical than ever that advisers can demonstrate that their clients are receiving value for money.
“Despite the royal commission headlines, my experience with advisers indicates that most advisers don’t charge their clients anywhere near enough for the time, effort and service provided,” Mr Ardino said.
“So, just as important is to ensure that your service agreements are commercial and that you are not promising too much for too little and as a result not living up to what you have promised because it is unrealistic.”
As a result, Mr Ardino advised firms to be reviewing their service arrangement for each client.
“If the documented agreement is not what is actually occurring then you need to redefine this with your clients,” he said.
“The cost of delivering advice is going up and non-fee for service revenue will reduce or disappear, therefore you need to ensure that you don’t have ‘loss leading clients’ in your business unless there is a good reason for it.”
Given that opinion polls are indicating that a change of government is on the cards this year, Mr Ardino advised firms and their advisers to understand the possible impacts of a Labor government led by Bill Shorten. He noted that Labor has:
Further, Mr Ardino said that business lobby groups have already begun wining and dining Labor’s shadow ministers in anticipation of the win.
“Gaining an understanding of the likely changes arising from a Shorten Labor government coming to power after the 2019 federal election means that your clients and your business are better prepared,” he said.
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