The breakdown of the costs not only took into account the fee-for-service rate but also the percentage component of annual fees for advice.
While there is nothing new there in terms of fee breakdown, except for perhaps itemising advice for the consumer like a shopping list, the continued focus on costs and fees is again placing increasing pressure on financial planners at all stages of the advice spectrum.
The issue of fees is a long, drawn-out debate that of course carries weight in the mind of consumers. However, it is not the be-all-and-end-all, and nor should it be presented that way.
What is more important than the debate on fees is the quality of advice the consumer is forking out money for. There certainly appears to be little consideration on what the consumer is actually getting for their money in terms of advice.
Would you fork out $5000 for shoddy advice?
Would you give a person who set up a card table with a wet paint sign that read "Premium financial advice, SOAs (statements of advice) while you wait" the time of day? Hopefully not, and nor should your client or prospective client.
However, if the negative perception of financial advisers is allowed to continue, consumers will not be blamed for thinking such a path is the one they need to take. As a consumer, the cost of advice has little bearing on my decision on choosing financial advice.
While it is obviously going to limit my choice, I am not going to choose a cheaper option purely to save money. Isn't my financial adviser going to help me with my finances?
What concerns me more is there doesn't appear to be an entry point. Where do you start?
The amount paid for advice is the least of a person's worries if they have less than $50,000 to invest. (I don't have that much to invest).
So, it appears such boundaries have already been created for the consumer.
Another debate the industry needs to prepare itself for is about the next generation of consumers who are currently spending more than they are earning or in fact saving.
Surely this will mean the accumulation generation for advisers will change shape. This generation will not be concerned about the cost of advice because they will have so few funds that they may even prompt another upwards push in the retirement age for Australians. I hope I am wrong.
As Australia is currently facing a growing underinsurance problem, what we perhaps should be thinking about is the prospect of focusing too much on the negative as it may present us with an under-advice problem.
