Financial planning practices looking to move away from commission-based advice to a fee-for-service model need to review their whole business structures in order to make a successful transition, a best practice consultant has said.
Making the transition to fee for service is much more than just changing an advice firm's remuneration model, E+W Strategic Partners managing director Lap-Tin Tsun told attendees at an FPA lunch yesterday.
Advisers should consider using a seven-point framework to make a smooth transition to fee for service, he said.
"The 7P model is a very simple and easy-to-use model that works very well," he said. "It is useful as a planning tool because it makes sure you cover off everything that you need to address."
Tsun said the 7P model represented seven different key business areas, which included purpose, proposition, promotion, platforms and processes, people, placement and profit.
"If you think about your business as a front office and a back office, then if you look at the 7P model, the first three Ps - purpose, proposition and promotion - represent your front office, your client-facing side of the business," he said.
"The second set of Ps - platforms and processes, people and placement - represent the service delivery of the business to your clients.
"So if you can align your front office with your back office and optimise that performance, that then naturally leads to profit. The 7P model is useful to align each part of the business so it's one cohesive whole, which then allows you to actually deliver and demonstrate a credible business to clients."
Tsun suggested that financial planners should now start to build a fee-for-service transition plan and allocate at least 12-18 months to implement it.
