Colonial First State (CFS) has accelerated the transition to fee-for-service for all its advice businesses, with completion of the changeover expected by 2011.
While the shift to a fee-for-service model for all of CFS's advice networks began two years ago, CFS distribution general manager Paul Barrett expected the transition to be finalised within the next 12 months.
"In the Commonwealth Financial Planning business the standard operating model is that advisers will charge a fee that is negotiated with the client rather than built into the product," Barrett said.
"Now that's not 100 per cent of the time at this stage, but we are definitely moving towards a 100 per cent application of that."
The transition to a fee-for-service model was different for a salaried planner compared to a self-employed planner, he said.
"In the case of the salaried planners it's very much a case of business as usual. They've been operating in that environment for a while and they've got a pricing policy that essentially links ongoing services provided to the fee that is charged."
However, he said for a self-employed planner the transition was more complex because the business model often had to undergo significant change.
"The advisers need to gain a very thorough understanding of the profitability in their practices before they go onto a new fee model," he said.
"For example, if a typical self-employed planner was thinking about what their value proposition is, they then have to be able to deliver services that meet that value proposition and charge appropriately for them.
"The exercise of working all that out is not straightforward, so the various different self-employed firms are at different stages in that process. But I'm confident that the Financial Wisdom advisers, for example, will get there before 2012."
