Dealer group Financial Services Partners (FSP) has reduced the fees charged to its adviser network as part of a restructure of the company’s business model.
In line with its restructure, the company has reduced the costs to its network of advisers and has introduced caps on fees.
“We’ve probably changed one third of our structure to accommodate where we are going,” FSP managing director Geoff Rimmer said.
“It’s a whole new business model – it’s not just what people want to pay.”
Rimmer said the firm’s decision to overhaul its model stems from internal and external research on pricing and discussions with its advisers and owner ING Australia.
“ING have injected a lot of money to help us with this process, but they haven’t gone to the advisers and said ‘we’re going to take the lumps out for you,'” Rimmer said.
“What they’ve said is they like the approach and they like the way we are trying to go through this structural transformation, which is what a lot of people have missed.”
FSP began its transition to a fee-for-service model in March 2009, though realised a change in value proposition would not go far enough.
“We actually spoke to people like industry super funds to consumer representative groups because you can get very insular,” Rimmer said.
“So we started to have the early engagement and discussion with the firms and we were very pleasantly surprised to find there wasn’t a lot of resistance to wanting to evolve themselves to a more transparent environment.”
Rimmer said a benefit to being a fee-for-service business is there is a lot of evidence now stating fee-based financial planning businesses are more profitable than a commission, non-fee based business.
“We think that over time, those businesses with high levels of engagement with their clients – and that means proper contracted fee arrangements – are going to be worth considerably more as well,” he said.
FSP has transitioned 35 per cent to 40 per cent of its member firms across to fee-for-service.
