According to managing director of the Investment Collective, David French, there is every reason for the average person to have an ongoing relationship with an adviser.
The comments follow musings from AMP chief executive Francesco De Ferrari that an ‘average’ Australian on an $80,000 annual salary shouldn’t be paying a full-time adviser on a recurring basis.
Mr French noted a growing view within the industry that the costs of financial planning can be reduced to such an extent that it becomes affordable by some ‘Aldi-style’ benchmark.
“Considering it takes at least a week to interview clients, collect and verify data and write and present a draft SOA, the cost of provision is at least $4,000. Add the cost of structuring and implementation and you are well on the way to five figures,” Mr French said.
“As with any service provided up front, where the results are not known for some time, the potential for sticker shock is very high and that is one reason why advisers charge ongoing fees. But it’s not the only, or even the most significant reason.
Mr French said someone earning $80,000 is likely going to end up with a sizeable superannuation balance, and on retirement get some age pension too.
Further, he said dealing with Centrelink is frustrating and time consuming, but also added that the organisation is notorious for short-changing retirees.
“Will a client pay specifically for 40 minutes on hold and then collecting the relevant data and the attendant unpleasant discussions, or should we just let Centrelink get away with it? How do we charge for rectifying administrative errors within managed funds, or sitting by a terminally ill client’s bedside checking off all the things that need to be done?” he continued.
“What about transitioning to retirement? My son who is disabled recently got notice through the ATO portal that he owed tax for the last three years. Up until this year he was at school and did not work. Someone had to sort that out.
“People find these tasks immensely challenging, often unpleasant, and that is where we add value every day.”
Ah Stockspot. A great example of why “roboadvice” is not actually advice. It is just an online investment sales tool.
Some will argue that financial advisers are just an offline investment sales tool. And the worst ones are. But good financial advice is much, much, more than that. Roboadvice is just a way of making a bad service cheaper. No wonder AMP is so keen on it. Though one wonders why the regulators are encouraging it?
Stockspot is a risk profile questionnaire connected to a brokerage account that buys passive ETFs.
You can get a diversified passive ETF for 27 basis points. That leaves 39 basis points to spend on your risk profile and your brokerage – not all that difficult.
They provide a service. It’s not terribly priced but it’s hardly a bargain, but the service they provide is only the most basic component of financial planning.
[quote=Mr. Connected To Reality.]Is it really disconnected from reality?
Right now, today, an ‘Everyday Aussie’ can get personalised, professional investment advice, get a personalised portfolio account opened up FOR FREE, from the comfort of their home, in UNDER 30 MINS and without using a Financial Planner or Adviser…
Then… Get the following benefits ongoing for around 0.66% P.A…
+ Access to an Advice & Client Care team
+ 24/7, online access to their portfolio
+ Annual review of their investment strategy
+ Automatic rebalancing
via stockspot.
The only person that wouldn’t like that deal… Is the Financial Adviser that’s still trying to deliver that service like it’s illustrated in this article.
… And that’s just ONE of the MANY options available to consumers now.[/quote][quote=Mr. Connected To Reality.]Is it really disconnected from reality?
Right now, today, an ‘Everyday Aussie’ can get personalised, professional investment advice, get a personalised portfolio account opened up FOR FREE, from the comfort of their home, in UNDER 30 MINS and without using a Financial Planner or Adviser…
Then… Get the following benefits ongoing for around 0.66% P.A…
+ Access to an Advice & Client Care team
+ 24/7, online access to their portfolio
+ Annual review of their investment strategy
+ Automatic rebalancing
via stockspot.
The only person that wouldn’t like that deal… Is the Financial Adviser that’s still trying to deliver that service like it’s illustrated in this article.
… And that’s just ONE of the MANY options available to consumers now.[/quote]
Is it really disconnected from reality?
Right now, today, an ‘Everyday Aussie’ can get personalised, professional investment advice, get a personalised portfolio account opened up FOR FREE, from the comfort of their home, in UNDER 30 MINS and without using a Financial Planner or Adviser…
Then… Get the following benefits ongoing for around 0.66% P.A…
+ Access to an Advice & Client Care team
+ 24/7, online access to their portfolio
+ Annual review of their investment strategy
+ Automatic rebalancing
via stockspot.
The only person that wouldn’t like that deal… Is the Financial Adviser that’s still trying to deliver that service like it’s illustrated in this article.
… And that’s just ONE of the MANY options available to consumers now.
I fully agree with Steven. I am in the process of moving away from an ongoing advice model, not only because I don’t think most people need it, but it just makes good sense. Most people benefit from good financial advice, however the number of people who can and are willing to pay a one off fee is so much greater than those that can/will/should be paying ongoing fees. I am also lucky to have a licencee that supports short SOAs, so the cost of providing this one-off advice is much more affordable.
Steven you are so wrong I find you pitiful. For your info I specializes in looking after Paramedics Nurses and police officers. I do it as a thank you to the service they proved me by protecting the community from people like you. And yes they do need me and yes they do appreciate what I do and yes they are all in a better position with my ONGOING advice. I have been told by people inside and outside of my profession that I’m one of the Good guys and that I provide sound good advice and service. so Steven I’m PROUD OF MY PROFESSION. are you of yours????
You’re correct. BCG and KPMG at least as far as I know.
[quote=Anonymous]Well Steven you are either a troll a cretin or just as ignorant as De Ferrari. I have young clients on less than $80,000 where I am helping achieve their financial goals and saved them from making financial mistakes. I have young clients that I have had to process insurance claims for terminal illness and TPD’s and clients that have passed away leaving young families so in your opinion these people don’t need help advice or guidance? you are just as disconnected as De Ferrari if not more so[/quote]
You are stealing from these clients and selling then a package they don’t need. End of story. Stop. They do not need you. At best you should charge them 2 or 3 hours of one off advice. You know it but it doesnt pay your Bill’s.
Anonymous you wrote ” The best thing advisers and the industry can do is actually accepted that society has moved past the old model(s) and get behind some drastic but logical change.”
Not really sure you understand what it is society is about to get.
If I am employed by a Super Fund “directly” (such as currently occurs at Industry Super), I will have legal issues with selling my employers product all day and every day. My salary and bonuses can be obtained from the collective of members who will pay for my services no matter if it was delivered or not.
Self employed Advice Practices will not do so well I fear. AMP will and is currently transforming into an Industry Super model – offer less products and charge all members a fee to service a very simple offer – and the client can not opt out, there is no BID and frankly, lots of General Advice / Intra Fund advice will be given.
So, society will be able to get “Advice” but it will be general, completely conflicted and you will pay for it the same as you did in the past.
I guess AMP has paid a high charging big 4 consulting agency to give them the standard boiler plate advice model template that is used. Plenty of motherhood statement,s plenty of nice graphs – just lacks the execution strategy and how to implement operationally. Missing the instruction implementation manual
Who said the fees need to be particularly high ? back in the day we could offer some good advice because the cost of providing that advice was offset by Life commissions, which we now discover are really bad, so on the one hand we have cheap advice in a pre LIF world and on the other hand expensive advice in a post LIF world, Ya gotta love the (lack of) logic
I suppose he (Mr Average) shouldn’t be paying an accountant for tax advice either ?
When I read this article I was reminded that AMP is a fee paying member of the FPA. AMP has made the decision to deliver advice via an App and Financial Planners who must act in the best interest of the client, are now actually the competition of the App or Call Centre. These large institutions will over the coming years further fight the viability of best interest advice in favour of their Apps etc and this issue will get more and more prelevant. It’s a war….One thing is for sure is that the FPA and AFA can’t have both parties any longer and they need to chose a side.
I have to agree with De Ferraris here. Someone on $80,000 could definitely benefit from advice, but I don’t agree that there is sufficient ongoing value to justify the cost of ongoing advice for the “average” employee. Don’t get me wrong, they will come out much further ahead having sought advice, but periodic advice is probably sufficient on “average”.
The reason this is all happening, is that a fast growing number of “advisers” are now earning intrafund commissions (repackaged as salaries & bonuses). At least they get to feed their wife & kids. Until IntraFund & Opt in is addressed, more people will end up being dumped by the week. The FOFA red tape is insane.
Steven and jeff G your comments are spot on. Full support. Self interest and fear of losing the golden goose ( which should have been used for Xmas lunch years ago ) are, and will, hold the industry back. I’ve never met de Ferrari ( and I don’t work for AMP or an industry fund ) but he is what this industry has needed because he doesn’t hold any of the old regurgitated ideas, defence of the indefensible or “old mates”. The system is broken and the honest amongst us know it. Some advisers and businesses have accepted this and have either moved their businesses to a better customer model or are in the process of doing so. Sadly, they are in the minority and I guess that can been seen in much of the comments. The best thing advisers and the industry can do is actually accepted that society has moved past the old model(s) and get behind some drastic but logical change.
[quote=Steven]Most and I mean the majority of the population does not need an adviser at all. It is absolute BS and self interest to have anyone with a normal situation on any type of service fee. The majority may need an adviser in their mid 50’s to mid 60’s but that’s about it. No fee for service nonsense, no $4000 SOA con, nothing of the sort. The majority just need a couple of hours a decade of guidance that’s it. You know it, I know it and the regulator knows it.
Your in an industry that is dying a slow death because it is vanilla now. It’s no longer the mystery it once was. Get over yourselves and retrain. You and your 80/90’s type business plan and structure are obsolete, finished and redundant. Sure a lot of you will continue hoodwinking some old folks and battlers into thi king the world will end without you but it won’t.
Find a new job, business and industry. This one is going down the route of the blacksmith.
[/quote][quote=Steven]Most and I mean the majority of the population does not need an adviser at all. It is absolute BS and self interest to have anyone with a normal situation on any type of service fee. The majority may need an adviser in their mid 50’s to mid 60’s but that’s about it. No fee for service nonsense, no $4000 SOA con, nothing of the sort. The majority just need a couple of hours a decade of guidance that’s it. You know it, I know it and the regulator knows it.
Your in an industry that is dying a slow death because it is vanilla now. It’s no longer the mystery it once was. Get over yourselves and retrain. You and your 80/90’s type business plan and structure are obsolete, finished and redundant. Sure a lot of you will continue hoodwinking some old folks and battlers into thi king the world will end without you but it won’t.
Find a new job, business and industry. This one is going down the route of the blacksmith.
[/quote]
Steven is the guys you see on television who says – I’m looking pretty good, I’ve gone to cash – after the market has fallen 25%. A troll and/or not to smart.
[quote=Jeff G]Sorry David – you’re off the mark and your response is entirely self serving. As an adviser (not with AMP mind you), those on $80k income do not need an adviser unless some significant one off financial event or perhaps nearing retirement. I would say these people either work with an intra-fund adviser (usually part of their fees in an industry fund) or stick it in a Life Stage low fee Super Fund. And again, for this audience who likes to attack those with a modicum of commonsense I am not associated with any industry fund. Frankly, these comment sections do not shine an overly intellectual light on our industry with such adviser hubris and self interest.[/quote][quote=Jeff G]Sorry David – you’re off the mark and your response is entirely self serving. As an adviser (not with AMP mind you), those on $80k income do not need an adviser unless some significant one off financial event or perhaps nearing retirement. I would say these people either work with an intra-fund adviser (usually part of their fees in an industry fund) or stick it in a Life Stage low fee Super Fund. And again, for this audience who likes to attack those with a modicum of commonsense I am not associated with any industry fund. Frankly, these comment sections do not shine an overly intellectual light on our industry with such adviser hubris and self interest.[/quote]
If you are an adviser and believe intra-fund advice and Life Stages is the way to go, it’s no wonder you cannot get your head around what the cost of advice provision amounts to. Hubris ? get real.
Look at Bill Shorten’s trolling comments in this…he even has to go by the name of “Steven” now! Come on Bill,you lost the unlosable…just take your sour grapes and go away 😉
I wonder if anyone has ever told Franchesco de Ferrari that it’s better to have someone suspect you of being a fool than to open your mouth and remove all doubt?
How will AMP retain their customers ? On the one hand they are claiming they don’t need an adviser to support their robo advice strategy and on the other hand they want to keep advisers on to maintain their clients after screwing their colleagues. And to Steven’s point below we have always known that 80% of the population do not enter an advice relationship. Just as a number of people do their own tax, mow their own lawn, fix their own leaking taps etc The value placed on a trusted relationship to guide a family through their financial management from cradle to grave does not need to be validated by 100% of the population.
Well Steven you are either a troll a cretin or just as ignorant as De Ferrari. I have young clients on less than $80,000 where I am helping achieve their financial goals and saved them from making financial mistakes. I have young clients that I have had to process insurance claims for terminal illness and TPD’s and clients that have passed away leaving young families so in your opinion these people don’t need help advice or guidance? you are just as disconnected as De Ferrari if not more so
Sorry David – you’re off the mark and your response is entirely self serving. As an adviser (not with AMP mind you), those on $80k income do not need an adviser unless some significant one off financial event or perhaps nearing retirement. I would say these people either work with an intra-fund adviser (usually part of their fees in an industry fund) or stick it in a Life Stage low fee Super Fund. And again, for this audience who likes to attack those with a modicum of commonsense I am not associated with any industry fund. Frankly, these comment sections do not shine an overly intellectual light on our industry with such adviser hubris and self interest.
Most and I mean the majority of the population does not need an adviser at all. It is absolute BS and self interest to have anyone with a normal situation on any type of service fee. The majority may need an adviser in their mid 50’s to mid 60’s but that’s about it. No fee for service nonsense, no $4000 SOA con, nothing of the sort. The majority just need a couple of hours a decade of guidance that’s it. You know it, I know it and the regulator knows it.
Your in an industry that is dying a slow death because it is vanilla now. It’s no longer the mystery it once was. Get over yourselves and retrain. You and your 80/90’s type business plan and structure are obsolete, finished and redundant. Sure a lot of you will continue hoodwinking some old folks and battlers into thi king the world will end without you but it won’t.
Find a new job, business and industry. This one is going down the route of the blacksmith.
Exactly!! AMP’s strategy is seriously out of touch. I am very glad not to be an AMP shareholder. It is also telling that De Ferrari said AMP will need at least 3 years to realise this latest strategy. If it was that good, it should be able to be successful well sooner that that. By the time 3 years rolls around, the CEO would have moved on will all his money. AMP will then likely spend many more millions bringing in yet another guru with no financial planning experience to “fix” the “impossible to predict” problems!
Whilst I agree that some clients do require an ongoing advice relationship, depending on their relevant personal circumstances, I am wondering where in the corps act and regulations that I can find reference to provisions that allow the presentation of a draft SoA???
I am an adviser and agree with you David. Most advisers only take income as one of the considerations as to whether an individual or a family will benefit from an ongoing advice relationship. There are many other parts to consider such as those you have mentioned.
AMP has totally lost it. Sad to see such an iconic company go the way it has. But then again, after years of self politicking and virtue signalling, no one should be surprised. The sooner it is broken up, the better for the community, IMO.