Paying the advice price

Sim · 05-09-2008, 02:58 PM

Paying the advice price | News.com.au Smart Investing Blog

Quote:

Good financial advice should pay for itself. The tougher question is what is the best way to pay an adviser’s bill.

This is where the commission versus fee for service debate begins. With investment markets having just endured their worst year for about two decades it is not surprising that the fee debate is heating up. Paying one to two per cent in fees when your investment has grown 20+ per cent is one thing. Paying one to two per cent when your portfolio has lost 20 per cent tends to dramatically shift the focus on to the fees.

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Mark Laszczuk · 05-09-2008, 03:52 PM

I went to a talk a guy was putting on a few weeks ago and he came up with this:

Tell clients that they pay you on a weekly basis when you make them money in that week and if you don't make them money that week, they don't pay you.

I lol'd.

It really makes me laugh that people take a short term view when it comes to their planning.

"HEY! YOU'RE NOT MAKING ME MONEY THIS YEAR, WHY SHOULD I PAY YOU."

"But I've made you money over the long term yes? You are confident I will continue to make you money over the long term, yes?"

"Yeah well, you have a point there, I suppose..."

Mark

carlosreynolds · 05-09-2008, 04:06 PM

See attached for Peter Bobbins article.

Why don't other provider's jump on board the "no commissions" action?

Mark Laszczuk · 05-09-2008, 04:34 PM

Again with the fees vs. commissions? First we have a shares vs I.P. thread (again), now the fees vs commissions (again). Myabe it's just because I have to see/hear/deal with it all the time, but I'm over it!

Mark

Edit: besides carlos, I think people would still kick up a stink about paying fees when the market falls whether they are paying fees or paying commissions. In most cases, fee based advice is more expensive than commission based advice, did you know that?

AsxBroker · 06-09-2008, 12:18 AM

Carlos,

This is why Peter Bobbin is saying that it is better to pay commissions (ie, it's more tax efficient and generally cheaper than fee based advice).

Reality, is that it is up to the adviser on how they charge, most platforms are flexible, the most flexible I have seen is AMP Flexible Lifetime series (Investments, Superannuation and Allocated Pensions), dial up, dial down commission, set a monthly dollar based fee, do fee only based work, etc.

Quote:

Originally Posted by Mark Laszczuk

Edit: besides carlos, I think people would still kick up a stink about paying fees when the market falls whether they are paying fees or paying commissions. In most cases, fee based advice is more expensive than commission based advice, did you know that?

Cheers,

Dan