A growing percentage of financial advisers plan to wind down asset-based advice fees and broadly adopt fixed-fee structures, a new report shows.
According to the Investment Trends 2013 Planner Business Model Report, financial planners expect that fixed-advice fees will form the largest component of practice revenue by 2016, an estimated 35 per cent of total revenue.
Fixed-advice fees currently account for around 24 per cent of revenue, up from 18 per cent in 2012. Asset-based fees represent around 33 per cent of revenue, up from 22 per cent in 2012.
Investment Trends senior analyst, Recep Peker, said financial planners now generate 62 per cent of their income from fees, compared to 44 per cent in 2012.
The Investment Trends report, which is based on a survey 1141 financial planners in April and May 2013, also found 95 per cent of financial planners are struggling to fully implement changes under FoFA.
Only 23 per cent of respondents were confident about meeting FoFA’s fee-disclosure statement requirements, with 48 per cent indicating that the disclosure requirements presented a major challenge.
“Financial planners have now awoken to the administrative burden posed by the annual fee-disclosure requirements,” Peker said.
“Not all practices are completely ready for FoFA, despite the fact this study was completed just two months before the reforms came into effect.”
Around 70 per cent of respondents said they wanted more support from their dealer groups, namely in education and training, practice development and technological enhancements to their software systems.
The study found that NAB Financial Planning’s salaried advisers felt the most confident about FoFA.
