Infocus believes it has developed the solution to simplify the fee consent conundrum after developing an app that will work across all trustees and product manufacturers.
Fee consent was introduced in July 2021 following a recommendation from the Hayne royal commission and requires advisers to obtain written consent to deduct ongoing fees from each product.
Infocus founder and managing director Darren Steinhardt spoke to numerous trustees and product providers with the feedback being the variation of fee consent forms was due to the specific legal advice given to the manufacturer.
“What product providers have already done is spend millions on building their fee consent digital interface,” Steinhardt tells Professional Planner.
“You were never going to get to the point where there was a single common form that everyone completes.”
Instead of trying to get each manufacturer to provide a consistent form that will require them to spend “another truck load of money”, Steinhardt worked on this alternative.
“They built their back ends for a specific purpose so let’s let them keep what they’ve got,” Steinhardt says.
The Minister for Financial Services Stephen Jones has expressed willingness to accept the Quality of Advice Review proposal which would simplify the fee consent regime to rely on a single prescribed form, but Steinhardt says this will not impact the value of the app.
“It’s not a fee consent solution, that’s just what we’re using it for,” Steinhardt says.
“It’s a digital signatory solution that feeds into a CRM and into product which means we can then put application forms and all the other documentation that advisers every day are using to approve things.”
The app has the backing of all major platform providers including MyNorth, Insignia Financial and Netwealth.
“We’re speaking to as many product providers as we can, so we can obtain support for the app from all major platform providers, including the likes of CFS, MyNorth, Insignia Financial and Netwealth,” Steinhardt says.
The managing director of Netwealth, Matt Heine, noted last year that product providers had been on the backfoot adapting to the fee consent regime requirements.
Top score
Steinhardt says the industry complained about the fee consent process lacking digitisation which created unintended consequences when it was resolved.
“Now, the adviser probably has a harder time because he can’t generate a form to suit what the product needs, the adviser then needs to go into each of these different systems for each product individually,” Steinhardt says.
“There’s almost zero advisers in this country I would suggest are using one product or platform solution across all clients, across their entire practice for myriad reasons. Therefore, most clients will have more than one product solution requiring multiple forms to complete their fee consent requirements for the year.”
Steinhardt says the Infocus record for free consent documents signed by a client is 14, so far. “The experience for the client, quite frankly, is poor,” he says.
“When you have human beings doing something, it takes a lot of time. Every time you add a human to the process, it adds complexity, it complicates it and there’s a margin of error.”
It was during the practice’s professional indemnity renewal process the firm discovered most potential liabilities related to administrative issues.
Analysing seven years of issues and complaints, it took going back almost six and a half years to find a complaint related to advice.
“To go back and find an issue or complaint in our business that was actually the result of bad advice or something wrong with the advice, we actually had to go back six and a half years,” Steinhardt says.
“We’ve had other issues in this time, but every single one has been an administrative error. The most frustrating error we have is around fee consent.”
Million-dollar man
The app will cost a further million dollars to develop, but Steinhardt says he wants to give back to the profession.
“I’m happy to do it because this industry has absolutely been very generous to me so I believe in giving back, otherwise I wouldn’t do what I do,” he says.
There will be no cost for advice practices that are happy to use the app with the standard branding, but there will be a charge for a white-labelled product which Steinhardt estimates will be $25-50 a month.
While advice practices will get the system for free, product providers will be pay a fee.
“[Product providers] are already spending a while lot of money doing this, so for us getting this solution out there it’s going to cut the cost they spend on maintaining their back end and be a far simpler process for them,” Steinhardt says.
While he was quite happy to show off the app to Professional Planner (albeit over Microsoft Teams from the comfort of surfboard laden, Sunshine Coast office), Steinhardt says it is still in prototype stage with aims for a launch by Christmas.
Once publicly available, advisers and clients will both download the app from the Apple or Android stores.
“Once they’re there, they can hit the button and see what the fee consent form is,” Steinhardt says.
“Once they’re fine with it, it’s signed. Straight away it sends the forms in a digital format to every single product provider.”
The reality is that the Annual Fee Renewal Consent forms do not exist in any other nation on earth & should be eliminated. There should only be an Opt In required when the fee amount changes.