Advice now has a Price
It’s out, it’s official. The report commissioned by the David Whitely of the Industry Super Network from Rainmaker research, has shown that $1.5 billion dollars is being paid out to advisers by way of commissions. The report also revealed that a further $200 million was paid by life insurers which, I suspect, included group life commissions.
The report didn’t reveal the amount of money spent on television campaigns to promote super but I guess that’s another story, or is it?
You see, advice has a price that must be paid. In the future, when advice is being sought, the consumer will pay a fee for this service. What’s exciting is we now have an idea of the size of this market…$1.5 billion, so what strategies are you adopting in your business to attract a portion of this fee income?
Some things will change. Clients will be able to turn off the fee whenever they no longer wish to receive advice so this is where the adviser must convey the true value of their proposition. The really great thing is I am sure, clients will receive much better advice and not limited to just product recommendation.
For the adviser there has always been a price to acquire new business. Often referred to as prospecting this activity finds itself lumped under the heading of marketing for want of a better description. While it will not come as a surprise to most advisers of some years standing, the expense associated with prospecting is frequently overlooked when calculating the cost of producing revenue.
As a business owner, the adviser recognises this expense must be funded from revenue and that it will directly impact the bottom line profit of the practice. It is important therefore to attribute a valid assessment of this expense to enable the adviser to correctly price the value of their client proposition.
Product manufactures have a budget for promotion (prospecting of a kind) such as television advertising and the dollars have to come from somewhere, right?
In the case of ‘not for profit’ funds, does this mean the dollars come from member’s funds? One snippet leaked from the soon to be released Cooper review, indicates there will be changes to trustee duties when reporting on costs back to members – presumably including the cost of, among other things, television advertising. So let’s see what that figure looks like and how it impacts the member’s bottom line David.
Many Licensees are not waiting for the Cooper review to be released. They have already made announcements that advisers within their group will be offering a fee based method of remuneration.
It’s out there and it’s happening. It won’t be like a light switch David but, it’s happening and life will continue. Advisers are embracing change and are taking up the tools and resources to assist in developing a fee based model.
