The issue of how to structure and price a financial planning service, and articulate the value of that service to clients, underpins a practice’s ability to generate fee income.
In 2009 the first comprehensive analysis of how planning practices structure, price and sell advice was undertaken by Elixir Consulting. The analysis has been conducted each year since, and the company releases a public report every second year. The last one was released in July 2012.
Research for the next report is in the field now, and financial planning practices wishing to participate can access the survey online. The survey closes on Thursday, August 14.
Elixir managing director Sue Viskovic says the first survey consisted largely of interviews with about 120 firms, in the early stages of the financial planning industry’s move towards fee for service.
The second survey consisted of interviews and a survey to begin to identify both the quantum of fees charged, and the services offered for the fee. It covered almost four times as many firms as the original research.
“By this point, we were not seeing too many completely new things,” Viskovic says.
“It was more around the numbers people were charging, and how did they present it.”
Viskovic says with fee-for-service models now firmly entrenched, the focus of the current research will be on data collection, to build up a picture of exactly how much financial planning practices are charging, and how services are structured.
“We’re not going to do a lot more interviews,” she says.
“We’re not finding too many new, outrageous things that we need to do a lot of qualitative, in-depth research and interviews on. So we’ve structured this survey so it’s picking up the data that we need.”
Viskovic says the 2012 research revealed “how, and how much, advisers were charging, the challenges they faced and how they overcame them, with information on pricing insurance, stockbroking and financial planning from a wide range of licensee sizes, and those located within accounting practices”.
She adds that the task of implementing a fee structure is an individual pursuit – there’s no single model that necessarily fits all businesses.
“We would counsel against a business simply copying another’s pricing model and implementing it,” she says.
“But sharing ideas, experiences and understanding different fee structures has proven to be very helpful to many advisers.”
Viskovic says implementing a fee structure is not always a fast process, either.
“Over half the advisers in the research estimate that it took them over six months to create their pricing model,” she says.
“And 95 per cent estimated it took them a year or more to implement it.”
