by Susan Edmunds
Dowling, who runs Stratus Financial Services, spoke at the 9th annual securities law conference in Wellington this week.
There were changes ahead for the country’s 6500 RFAs and 1900 AFAs, he said. AFAs in particular would need to consider how they would get clients to pay for advice when they were used to paying via providers.
He gave the example of the recent Mighty River Power IPO and said by the time an adviser did the necessary research and administration on top of working with the client to determine their situation and requirements, they would rack up about $600 in fees - even if the share purchase was as little as $2000.
But he said there would still be opportunities for advisers, even if they had to move to dealing with more high-net worth clients. “The big part is how do you sell the value? In 2008 we started talking to clients about charging fees.”
When he did an annual review for a client, he would remind them that it was possible for him to charge a fee for the service, but he had chosen not to. “Whatever they’re paying, you need to offer value that is two times that… With lawyers and accountants, people are used to paying bills for them. So I’m the only one with a problem.”
Lawyers had previously received commissions on conveyancing, he said, and had moved to a fixed fee. “This is a transition that other professions have gone through before us.”
Small advisory firms might need to amalgamate and share resources, he said. Once advisers were confident about their value, it would be easier to attract new people into the industry.
“How do we recruit new advisers when we are unsure of what our offer is?”
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