Flat fee advice model ‘rubbish’
The assets under management modelrecently came under fire from the Australian Financial Review's Asset magazine editor LengYeow, who said, "There's no reason why an industry, which claims to have successfully transitioned to fees, charges for ongoing advice based on a client's underlying pool of assets."
Australia's new FOFA (future of financial advice) regulations ban "conflicted" remuneration structures including commissions on the distribution of retail investment products, and restrict where assets under management fees can be charged.
But Auckland investment adviser Grant Cleary said the flat fee model favoured by the Australian regulators is "rubbish" and "nobody does that anywhere in the world".
Charging based on assets under management is a "win-win" model for both the investor and the asset manager, he said.
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