Head of the Quality of Advice Review Michelle Levy has suggested the fee financial planners can charge for client services will be the differentiating factor between themselves and other individuals operating in the space.
“I don’t think you should worry [about allowing more people to provide advice]. The idea of the fee is something that I think protects the industry and gives you a [very neat distinction] rather than trying to distinguish on complexity,” Levy told delegates at the Financial Planning Association 2022 Professionals Congress held in Sydney today.
“[Because] if somebody is paying for something, and I know people pay for things that are bundled in product fees, but if you actually pay a fee for a direct service, you expect something more than if you are ringing your insurance company [when] buying a policy.”
She used the example of advice being given by a super fund to illustrate how her proposed model would work.
“A superannuation fund is a really good example here. They will give intra-fund advice, at the moment it is part of the administration fee. If they’re giving more complicated advice, they’re not going to want to load up their administration fee with the cost of providing that advice,” she noted.
“So they will have to charge their member a fee for that advice [the instant] they have to use a relevant provider, financial adviser, under the model I’m proposing.
“That to me is quite neat and gives the professional adviser a space to operate in.”
To ensure the proposed model will operate in the manner intended, she said the financial planning industry as a whole will now need to reinforce the message that professional practitioners will be the only people who will be able to charge a fee for the services they provide to consumers.
