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Jessica Darnbrough
Brokers who do not charge a fee for advice will be in a minority within two years, one broker has claimed.
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Speaking to The Adviser, Money Links’ director Garry Ross said the industry is gradually moving towards a fee for advice based model and brokers should jump on the bandwagon now or be left behind.
“Brokers who do not charge a fee for advice will be doing themselves a disservice, because clients are getting accustomed to paying for financial advice. In addition, they are happy to pay as long as they feel they are getting value for money,” he said.
“Within two years, I believe those who don’t charge a fee will be left behind, because clients will wonder what’s wrong with them and their advice.”
Mr Ross’ comments were largely echoed by NAB Broker’s general manager distribution John Flavell.
Mr Flavell told The Adviser that brokers are professionals and they deserve to be remunerated in the same way as other professionals.
“At the moment, the way brokers are remunerated is skewed more strongly towards commissions, but in the future, it could become more skewed towards fees,” he said.
“There are some strong indicators that the industry could head the way of fee for advice. The financial planning space is very similar to our own and they have started to head down the path of fee for advice thanks to the regulator.
“The question then becomes, do we sit back and allow the regulators to dictate how we are remunerated, or do we make our own decision, and work with the regulator to create a model that benefits broker and consumer. I think we have the chance to be proactive in this area.”
But while some of the industry is confident that the third party distribution channel will eventually introduce a fee for advice based remuneration model, not everyone is convinced.
A recent straw poll conducted by The Adviser found almost 60 per cent of brokers believe the future of this industry does not lie in fee for advice.
Of the 344 respondents, just 32.6 per cent felt a fee for advice remuneration model is imminent.
