‘Something has to give’: Red tape sees over half of planners hike fees

In a recent blog post for the FPA, the research house’s managing director Jason Andriessen noted that more than half of advisers had increased their fees in the last six months, according to CoreData’s Quarterly Adviser Pulse Check.

“And those fee increases have been material – around two in five of planners who increased their fees did so by more than 10 per cent,” Mr Andriessen said.

“Unfortunately for clients, this appears to be just the start. The research also shows that around seven in eight financial planners already have plans to increase fees again, and half of them expect to do so within the next six months.”

Mr Andriessen drew a common conclusion with the UK’s Retail Distribution Review, which occurred in the late 2000s and saw a large proportion of advisers leave the industry while fees increased significantly.

“After the Retail Distribution Review changes were implemented, the experience in the UK was milder than the Australian experience. The number of financial planners in the UK decreased by 18 per cent between 2009 and 2013, but it still impacted negatively on consumer access to advice,” he said.

“In Australia, financial planner numbers are already down by more than 25 per cent, and the higher education transition period still has years to run. In the UK, client fees increased by an average of 15 per cent. In Australia, that figure could be much higher.”

Mr Andriessen said with ASIC levy fees, PI premiums and dealer group costs rapidly rising, along with the significant demands of the FASEA framework, “something has to give” to allow advisers to keep offering their services at an affordable level.

“Most financial planners don’t want to price their services out of reach for potential clients, but circumstances are forcing their hand,” he said.

“With rising education requirements and new professional standards, now is the time for a regulatory paradigm shift to enable more affordable advice.”