The definition of fee-for-service advice can cover a broad range of pricing mechanisms but for Syd­ney-based firm Multiforte only one method was palatable.

The firm, which began operations in January of this year under the auspices of the AXA-owned Charter Financial Planning licence, has chosen to tread a less travelled path in the industry by charg­ing a flat fee-for-service. In doing so the group’s principals, Tony Clark, Terry Downing and Kate McCallum, have deliberately cut themselves free from the comforts of FUM (funds under management).

According to McCallum, the three principals have an ethical aversion to FUM-based fees because

it is not linked to the actual value of advice.

“Let’s say the ASX was up 20 percent in a year; I would have received a 20 percent pay rise but I’m doing nothing extra,” McCallum says. “My concern with asset-based charging is that you are riding off the back of your clients’ money – that’s their money.” Instead of using an asset-base rate, Multiforte assesses a client’s advice needs upfront through a series of consultations before presenting them with a quote. Both parties must then agree on the quote before proceeding.

“The quote is based on an estimate of the effort involved, just like any professional services brief,” McCallum says. “Everything is transparent. The client has a clear idea of the advice involved so there will be no surprises later.”

The group also prides itself on offering whole of market advice, covering areas such as industry superannuation funds and group insurance offers that most other commission-based advisory firms avoid.

According to McCallum. Multiforte is targeting professionals, many of whom intrinsically under­stand the value of flat fee versus a percentage of assets approach, and also younger people who may have a high income but few assets.

While the practice is some way from meeting its client capacity, which has been set at 150 clients per principal, McCallum says it is “on track with our business plan,” which is undoubtedly quite unique.

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