Archive for December 2010
What is fee for service financial planning?
Fee for service financial planning is where a client pays their financial adviser a fixed fee for the services and advice they provide. Much like you would pay your mechanic to service your car.
Currently in Australia there are two main ways that financial planners are paid Commissions and Fee for Service:
Commissions – this is the most common form of remuneration for financial planners in Australia. It is where product providers or financial institutions pay financial advisers a commission when their client invests or purchases their product or investment. There are generally two types of commission that are paid:
- Upfront commissions which is a larger lump sum amount paid to the financial adviser when the product or investment is first set up. This lump sum amount varies depending upon the arrangement with the provider but is generally around 4%
- Trail commissions which is a smaller ongoing commission which is paid to the financial planner usually on a monthly basis for the life of the investment or as long as the client retains the product or advises the provider that they have transferred to another financial planner. The average trail commission is around 0.8% per year.
Fee for Service – this is a less common form of remuneration for financial advisers where instead of receiving payment from the product provider, the client pays their financial planner directly for their time and advice. Often there will be a set fee either based on an hourly rate and/or packaged based where you can choose to pay for particular services such as a full Statement of Advice or setting up of a Self Managed Super Fund.
Which financial planning payment style is better? Commission vs fee for service?
There has been a lot of debate in the media about which style of remuneration provides is better for clients. The overwhelming majority of financial advisers in Australia are still commission based but our opinion is that fee for service financial planning is much better for clients as it lessens the risk of a conflict of interest. When a financial adviser is paid by a product provider we believe that they are inclined to work for the commission rather than work for the client. This can result in clients being “sold” into products which may not necessarily be the 100% best option for their needs. Say your financial planner has 2 options of where to recommend you invest. One is better for your needs than the other, but the lesser alternative happens to pay the adviser a larger commission. You can see where the conflict for commission based financial planners arises.
In addition is the problem where most financial advisers in Australia don’t offer advice in areas such as budgeting, savings, and tax structuring as because they aren’t placing their client into a product they don’t get paid. Many people need this grassroots financial advice from a professional and aren’t getting it for this reason.
At Financial Spectrum, we believe that fee for service financial planning is the way forward. We know that we are in the minority of financial planners in Australia but we believe that this payment structure offers the best service to our clients and enables us to give advice to our clients in all areas of financial advice. At the end of the day, it is our clients who pay us for our service and advice, and it is our client that we are working for.
Higher target returns, a choice of investment from months to years, regular monthly income distributions are some of the benefits include in a best term deposit from Liberty Financials.
In today’s business world, no one achieves results without proper market research. Every sector of every market is crammed with competing businesses, all trying to get some kind of advantage over the other businesses working in the same area. Tailored research into a market is the only way to claw a little extra ground for a company – a space in which it is able to start attracting customers that may otherwise have visited the sites or services owned and sold by similar enterprises.
The basic unit of marketing research is the individual consumer – a group of which, or whom, are referred to as the marketing demographic for the product or service in question. Basically, what market research does is to work out what kind of person, or kinds of people, are most likely to be interested in a particular type of product – and then direct advertising campaigns and actual marketing efforts towards attracting those people. The logic is simple and very effective – indeed, marketing research has been formally conducted with a great deal of success since the 1920s, when radio advertisers first found that the products they were selling sold better when their adverts were placed on stations that targeted the same audience as the product.
What happens is this. A market research company takes a product and brings it to the marketplace as a whole, whereupon it gathers significant amounts of data regarding people’s reactions to that product. Once enough data has been amassed, the successful demographics for the product become clear. So a product that reacts very well with teenage girls develops a demographic in the teenage girl sector of the market, and its advertising campaigns are conducted accordingly. There’s no sense in marketing multi coloured flexible hair curlers to balding middle aged men.
There’s a fairly technical side stroke of market research that can result in some surprising sales leads, too. If a product is hoping to sell to a particular market, and the research done by a marketing investigation company reveals that the target demographic is not interested, while another demographic is, the product is modified to appeal to its target audience. Or it may be altered to appeal to the new market, dependent on the nature of the research results.
The logic behind researching markets applies on all levels, to all products and services. Companies that own websites (which, these days, is pretty much all companies) are involved in market research every time they try to source the right keywords for selling their stuff. A keyword is heavily targeted towards a particular demographic – the more targeted the better, in fact, as very specific keywords tend to deliver much higher sales results because they come under fire from less competition.
In the modern business world, this tactic of defining market areas with less competition is one of the highest goals of good marketing research. There is, past a certain point, very little sense in trying to sell something into an over saturated market area. So really good market research will try to identify areas where a demographic can be refined to make a product or service particularly appeal to it.
Researching markets is one of the most productive ways a company can possibly increase its sales. Without it, in this day and age, it may die.
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