Financial planning advice comes in two parts.
Part one: Provide guidance and correctly set up the right strategies to achieve the client’s goals and objectives.
Part two: Track and check the progress of the client’s goals and objectives through Progress Meetings.
There is no such thing as set and forget goals and objectives. That’s why Progress Meetings are very important, so important, the Government legislated how they must be done.
There are two types of Progress Meetings* :
- Annual Engagement which is an agreement between a client and a financial planning practice. It sets out services to be provided and fees to be paid over a 12-month period. The practice and client may decide to enter into a new Annual Engagement, however there is no obligation on either party. If the client does not enter a new engagement, the practice ceases charging fees.
- Ongoing Fee Arrangement described in the Corporations Act 2001, s962A as a long term agreement between a client and a financial advice practice where the fee is set for Progress Meetings and Reports over a time frame of more than 12 months. This type of arrangement can include performance based fees, number of meetings and progress reports to be delivered over time. The client will receive an annual Fee Disclosure Statement (FDS) which sets out the services promised and received/used in the previous 12 months, services promised for the next 12 months.
Pricing Advice
Discovering the right fee for financial planning advice and progress meetings will depend on the qualifications, experience, corporate backing and the services offered by the Adviser and the firm. The minimum cost to provide just one piece of financial planning advice under Australian legislation is approximately $3,000 ++
REMEMBER: Cost is only an issue in the absence of Value
Rob Jones, Peloton Partners
References:
* Stuart Chandler, AFSL Compliance, Ongoing Fee Arrangements: New Obligations, Money and Life, 29 March 2021. Money and Life | Key considerations for the Annual Engagement Model in Financial Advice
David Haintz, Global Adviser Alpha, IFA Podcast, 23 March 2021. What will the adviser of 2025 look like? – ifa
Canstar, Cost of Advice, 10 December 2020. Financial Advisor Fees – How Much Do They Cost? | Canstar
