If you are wary of your financial adviser being biased by commissions then you will want to work with an adviser who charges fees and rebates commissions to you. But according to new research released today such an adviser may be hard to find, with only approximately 1 in 10 Australian financial advisers focused on charging that way.
The research by Investment Trends found that just 11 percent of Australian financial advisers now derived a majority of their revenue from pure fee-for-service models. (Read more here.) Some good news is that this number is increasing.
One very interesting result from the report is that: “those planners with over half their revenue derived from pure fee-for-service were likely to spend more time discussing planning for financial and lifestyle goals…”
To me financial advice and wise money management is not actually about the money – it’s about the lifestyle that you want money to facilitate.
So if the first questions you want your adviser to ask are about you and your lifestyle goals, and not about how much money you have to invest, then this research suggests you should seek a financial adviser who charges fees. That way you are more likely to find one who will ask you about your goals.
Don’t know where to start? Then start by finding advisers whose licensee is not owned by a product provider. That will eliminate about 80 percent of the market.
(This is not to say there aren’t exceptions to the general guide, but if you want a clear path through the maze then this is your quick start approach.)