A number of advisory practices remain reliant on commissions and rebates and do not intend to change their remuneration structure, a survey by broker firm Centurion Market Makers (Centurion) has revealed.
According to Centurion director Wayne Marsh, more than 50 per cent of Australian advisory practices had transitioned to fee for service, with 25 per cent of respondents saying they were waiting to see what came out of the proposed government reforms before they made any decisions.
Marsh said advisers needed to move with the times if they wanted to maximise the value of their businesses.
"We have been a little brutal in our feedback to those financial planners with no plans to change," Marsh said.
"We tell them either change your revenue model or potentially erode the value of your practice. If you don't want to change or can't, then sell now or find a merger partner who can help you make the transition."
Marsh said if practices did not make the move to fee for service, regulation could potentially force them to anyway.
"While the July 2012 deadline to ban commissions is not yet set in stone, if it does go ahead the value of practices operating off commissions will erode as they will no longer be able to service clients on a commissions regime," he said.
"The industry has been given a two-year notification of change and therefore there is a window to start the journey now and we would encourage planners to be on the front foot."
Marsh said of those businesses that had already completed the transition to fee for service, many were now well positioned to buy books of clients from those who were still receiving commissions and migrate them into their businesses.
