A major concern among planners is how they will address the new fee disclosure statements they need to produce from July. Claire Wivell Plater from The Fold says that in order to communicate clearly what fees clients will be paying, advisers first need to structure their fees so they can understand them.
“The biggest administration problem for [advisers] will be finding out exactly what fees they’re charging, because the fees are coming from a number of sources. But over time, as they move to non-conflicted remuneration, that’s going to become easier,” she told Wealth Professional TV.
Wivell Plater says that one thing advisers need to think about is how their fees are structured. “If they simply have one fee for all their services it’s going to be a lot easier to report against that. But if they have a number of different fees for different services, they’ll have to report against each one individually, and perhaps a lot of advisers don’t realise that at this point in time.”
She also suggests avoiding a statement of advice (SoA) that acts as a quasi-engagement letter, as it muddles up the purpose of the SoA – to give advice – and isn’t the appropriate place to enter into a contact with the client.
To communicate effectively with clients, Wivell Plater suggests taking focus away from cost and towards value instead. “If you talk about cost, clients always find that difficult and so do most planners. But if you talk about value, what you’re delivering to the client, then I think the client really appreciates what it is that they’re getting – they’re getting piece of mind, they’re having their security that their financial situation will be managed and looked after for them – and they expect to pay when they get value.”