Where have all the on-goings gone?

What would your financial advice business look like without it’s on-going revenue?

Can you remember back before mid-1990’s when most revenue in financial services was up-front? Can you remember what that was like? Could you and your business go back there (and would you want to)?

Let’s assume for a moment, that your advice firm had to re-position the value in your fees every year with every advice client.

Wow – wouldn’t that be a challenge.

Or does your firm consider that’s already standard operating procedure? That is, every advice client every year understands the amount of money (not just percentages) they are paying and re-considers (and re-agrees to pay) your fee every year.  

Regardless of current (toothless and) watered-down Future of Financial Advice reform, I’m willing to bet that by 12th June 2017, thanks primarily to future competition for consumer advice fees, today’s on-going fees paid for product advice will be virtually non-existent.


A number of reasons…

  1. The majority of the current generation of financial planners have not been skilled in a value proposition that properly positions the value of their on-going services and charges. They just aren’t equipped to position their on-going value in the future tough advice years. Product manufacturers will see this ‘weak-spot’ as an opening for more ‘direct’ offerings that circumvent ‘expensive’ and superfluous advisers in on-going years.
  2. The rise and rise of the Do-It-Yourself mentality coupled with more baby boomers retiring with greater access to technologies will spark an explosion of choice of cheaper service offerings to cater for expanding demand (and a growing superannuation levy). The Commonwealth Bank isn’t spending approx $1.1B on technology just to roll out a few new apps for your ipad or keep a few programmers busy. They see the trends that are dismantling traditional retail, print media and manufacturing practices knowing that old-world distribution of on-going financial services cannot avoid similar challenges. The manufacturers will do everything to maintain their customer bases, even if it means white-anting their existing distribution bases.
  3. APES230 – The next Nemesis of ‘traditional’ financial planning firms comes in the form of the proposed accounting standard #230 from the Accounting Professional & Ethical Standards Board. This will outlaw any commissions (up-front or on-going) from any product (insurance or investment) for any accounting firm (or related firm) offering financial advice. Shock! Horror! This standard is just the next round of a marketplace jostling to provide leadership to a financial advice-seeking consumer. It matters nought whether we agree with it or not (I do BTW), as it’s just the operating marketplace in a slowly maturing and emerging financial advice profession (and it won’t be the last).

On-going product-based advice revenue is dead.

Every advice firm will be affected.

What do you reckon?


About Jim Stackpool

For nearly 30 years Jim has influenced, coached, and consulted to advisory firms across Australia. As founder of Certainty Advice Group, he leads a like-minded team of professional advisory firms seeking to create greater certainty for their clients. As an author, blogger, columnist, and keynote speaker, Jim is regularly called upon for his professional insights into the advice industry. His latest book Seeking Certainty is available now.

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