Going to be an extinct species August 19, 2009

Now with proposed uniform licensing reggime both for mortgage consultants like us & Financial Planners, it is just a matter of time that we will be treated at par with Financial Planners.

Will anybody explain if just in case CHOICE recommendations are accepted & implemented wrt bans on commission, percentage-based fees and other kickbacks to advisers; how we in finance industry are we going to be paid for!!

Unless all financial instt. pay exactly the same renumeration and something that can at the most wishfully thinking; how else CHOICE recommending to put an end to conflicts of interest in the financial industry where offering a choice of financial instt. is a necessity.
Does Choice wants to compare different offers made by different financial instt. own their own to avoid conflict of interest among Financial advisers!!

Hang in there! August 19, 2009

It ain’t all that bad…..history will repeat and my money is on new players (product manufacturers) entering the market, once capital market pricing opportunities present again.

I also think that new distribution models will be developed too, which may look nothing like what brokers do now.

And at the expense of being ‘hammered by Xerxes’, if your service has value, then charge for it.

Just because the existing broker model and value proposition is getting smacked around, that doesn’t mean that the ‘liability advice’ model is dead.

It ain’t.

If you’re not worth paying for, then who’s fault is that. If your service does provide value, then charge for it.

Financial Planners have been kicked around for years by Choice, sometimes fairly, other times unfairly.

When Financial Planners evolved out of their insurance agent beginnings, their remuneration was almost 100% commission based. The FP industry has subsequently developed from flogging endowment polices to now providing ‘advice’ on a huge array of products, services admin platforms etc and they charge for it.

If brokers are waiting for a white knight coming from within the existing distribution model, think again.

Savvy Investor August 19, 2009

Sorry Hang In There,

Not until the Banks are forced to reveal their cost of Loan origination. It is not a level playing field if we have to disclose our fees and they can pretend their advice is free and impartial.

Unlike Fin Planners we are not tied to a Panel (at least most of us have off panel options) and we are already highly regulated and about to become more so. We do disclose all fees and commissions (soft and hard) and that there may be other options in the market we an not source. We do not pretend to give advice which is really just buy this product from this one supplier. We only give access to Credit products. Unlike Fin Planners, credit products are not ’set and forget’ for 10 or 30 years in your Super… most clients require refinancing, insurance e.t.c. within 4-5 years and we keep them aware of rate changes and other pertinent factors all the time (we earn our trail) and we intercede on their behalf when they have issues with lenders call centers e.t.c. We don’t charge $5000 for an SOA or just to talk over scenarios. The use of a Credit is not mandated by law, but we must contribute to Superannuation, which requires you to seek independent financial advice (who is truly ‘independent’ by the way?)…

Savvy, it's BIB..!! August 19, 2009

Savvy,

Lot’s here mate…but just a cuppla things

Yes, SG super is compulsory, but you don’t have to have advice, i.e.no SOA’s, no planner, no commissions. In fact, industry funds have recetly been given the green light to give limited advice to fund members and the planners are up in arms about it. And most SG contributions end up in industry funds anyway(usually default options).

Also, you don’t have to have financial planning advice at any time, if you don’t want. Many do, because the value offered by good planners covers off issues like, taxation, centrelink benefits, managed products, investment platforms, risk etc etc.

Fin Planners don’t set & forget plans either. They’d be dills if they did. Annual reviews are the norm & they are almost always charged for. Another reason to charge a fee.

And that’s the point. The FP model was once a product flogging exercise, without much attention given to appropriateness. A modern & evolved FP practice revolves around selling advice. Sure, they have earned commissions, but just about every survey I’ve seen over the last 20 years has anything up to 60% top 70% of planners charging a fee either on it’s own or in conjunction with commission.

But on the matter of bank ‘internal’ origination costs. I thought the banks (through the new licenncing laws) may need to disclose these costs similarly to their AFSL reps do now. The bank mobile bankers aren’t purely commission based (usually salaried & bonused), so with a licence (credit provider or credit service provider) they’ll need to disclose whether bonus or commissions.

Cheers

Investown August 20, 2009

FP have benefited from “Fee 4 Service” models, their busines improved from the busines value proposition as well they were able to think about succession as well as their future. Stop chasing every dolar, being the only rain maker, and have no value in your business as most brokers. Try borrow money against your business and you will soon realise the value in “Fee 4 Service” model. If recomendations are acccepted, the brokers woud need to evolve to survive.