Investment Trends has released further findings from its 2010 Planner Business Model Report, which indicate that 61 per cent of financial advisers expect to charge more for advice following the implementation of the Future of Financial Advice (FoFA) reforms.
“Our research found that the breakeven cost of providing full advice is $2,700 for the typical client”, says Investment Trends analyst Recep Peker. “The FoFA reforms pose a challenge to planners who are already struggling to align clients’ cost expectations to their cost of doing business.”
The survey found that 48 per cent of financial planners believed they would not be able to service as many low balance clients if commissions on new products are banned.
“Nearly a third of planners expect to increase their upfront fees in the new environment”, says Mr Peker. “And many intend to respond to mooted reforms by focusing their efforts on higher balance clients, creating a potential vacuum for the lower balance fund members now moving into the retirement planning phase.”
“This is doubly concerning given that limited advice models are really in their infancy in the Australian market.”
According to the FPA, this report identifies a critical disconnect between the perceived and real cost of advice (see: FPA Warns Against Over Regulation).
For further information on the Investment Trends 2010 Planner Business Model Report, see last week’s story: Consumers Only Prepared to Pay $300 for Advice.
