Most Popular ArticlesOctober 6, 2009
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It came as no surprise to the Australian advisor that, as the markets nosedived and companies began to fail, their profession (what they did and how they did it) came under renewed scrutiny. It’s clear that the same is happening in other countries around the world – not least in the United States.
The question for the US advisor is what’s going to happen to their role and how they can best adapt to a changing world. Irrespective of the details, change will continue. Perhaps the Australian experience can provide a few pointers for US advisors.
The fees clients pay
While the markets rose, relatively little attention was given to the fees being charged by advisors, even though more probably should have been. But the cycle always turns, and now so have clients, who have asked in increasing numbers (with a level of disappointment if not anger), “What exactly am I paying my advisor? What am I actually getting for this money?”
In an industry paper issued last April, the main advisor association in Australia, the FPA, proposed a number of key principles to respond to those client concerns:
- Consumers must be able to understand the fee they are paying.
- Consumers must be able to compare fees among different products/advisors.
- Fees for advice and for products should be clearly delineated.
- Consumers must agree to the fee with their advisor and should be able to request that it be turned off if no ongoing advice is being provided.
- Advisors should be paid by consumers for the services they receive, and not by the product manufacturer.
While these principles may be reasonably easy to understand and perhaps hard to challenge, consider the impact on advisors who will need to be able to clearly articulate to their clients (existing and new) just what it is that they do for the money the client is paying them. In our experience (in every country we operate) advisors struggle with this concept.
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