Clients have supported the move by three planning firms who have transitioned from a commission to a fee-based model.
Principals from adviser firms Planning for Life, Ascent Private Wealth and Prime Time Financial Counsellors spoke about how they retained their clients when moving to a fee-based business at the annual FPA conference in Melbourne yesterday.
"It was a learning curve for our advisers. They had to initially understand that what they did added value to their clients and that clients would pay for it," Planning for Life principal Rhonda McKenzie said.
"Once they reached that mental shift, it was easy to make that transition to a fee-based model."
Clients of Ascent Private Wealth are predominantly high net worth individuals and small to medium-sized businesses.
"My clients understand how commercial businesses operate. They expect to pay for advice," Ascent Private Wealth principal Mark O'Toole said.
Prime Time Financial Counsellors principal Nick Pantu said initially there was some resistance to the model by advisers within the firm.
"Once you articulate the belief that you add value to your client then you will start to see the results and how such a shift adds value to your business," Pantu said.
None of the businesses recorded client loss once the move to a fee-for-service model was adopted.
"Our clients were actually relieved that we did not have the conflicts of interest that comes with trail commissions," McKenzie said.
Pantu said opportunities with accountants and legal firms were actually created following the move to a fee-based business, including the potential for partnerships with such firms.
McKenzie said the revised fee model allowed her advisers to move from a transaction-based approach to advice to a full financial plan.
The advisers, however, said the move did not adversely impact the profitability of the business and that it was important that a fee-based model remained commercially viable.
"We love our clients but it was also important to remember that we were not a benevolent society," McKenzie said.
