1 Comment 1 CommentThe research, prepared for AMP by Colmar Brunton, shows that investors have a clear lack of understanding about how advisers earn their money or how much they pay for advice.
There is a significant proportion of investors (42%) who don't want to pay up front and still prefer to paying by commission.
The research asked what investors thought was a reasonable amount to pay an adviser for developing a financial plan.
It showed there was a wide range of values and the average was $320. When asked about the expected hourly rate the figure came out at $97.
There was a range of numbers for developing a financial plan. While $320 was the average investors who go to a bank employee expect to pay between $51 and $100 for developing a plan. Investors who go to accountants expect to pay between $201 and $1000 (46%) or $501 to $1000 (15%).
When it comes to hourly rates investors suggested a rate of $106 for accountants, compared to $97 for advisers and $163 for lawyers. Plumbers, builders and electricians had suggested hourly rates of between $56 and $58.
Several different payment ideas were proposed for advice with an agreed dollar value coming out as the most preferred followed by a percentage of assets under management, then an hourly rate, and fourth ranked was a combination of the first three.
The research says there were a number of investors who spontaneously mentioned an alternative approach. This method was that advisers should be paid a percentage of the gain made on investments.
Half of respondents said that the customer should be able to negotiate with advisers over how they pay for advice, while 26% said the industry should set fees and commissions and 15% suggested it was the role of government,
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