Advisers overdue for a pay rise
Financial advisers probably deserve a pay rise but getting clients to pay it is another question entirely, industry commentators say.
Wednesday, December 16th 2015, 6:00AM 
2 Comments
by Susan Edmunds
New Zealand financial planning and investment advisers who charge an hourly rate are asking, on average, $250 to $300 an hour from their clients.
Others charge a fee based on a percentage of assets under management (AUM), of between 0.5 per cent and 1 per cent. Many operate a hybrid structure.
Institute of Financial Advisers chief executive Fred Dodds said it was likely that those who charged an hourly rate were making less overall than advisers charging a percentage of AUM.
The $250 an hour rate is similar to the pay for a relatively junior barrister at most law firms and about twice what a locum GP would be paid. Law firms charge out their staff at a higher rate again.
Adviser Murray Weatherston said financial advisers' fees should be higher. “I don’t see a lot of difference between a good financial adviser and partner in a law firm. But the law firms charge a lot more than that.”
He said the biggest problem for advisers was what the clients were willing to pay. “Some people are working for a lot less than that. It’s a question of getting people paying for advice.”
He said very few advisers were operating solely on an hourly rate basis.
Industry consultant David Whyte said advisers might expect to spend eight hours setting up a meaningful plan for a client.
“A couple of grand is not an unreasonable fee for that. With the six-step process there is a bit more time spent on research and recommendations. Relatively speaking it’s a pretty good deal for the consumer to be charged that given the significance of the outcome of a well-constructed plan or recommended risk strategy.”
He said advisers had to become more skilled at communicating the value of advice to consumers.
“If solicitors and accountants can convince people they are providing value with their advice surely adviser should do the same.”
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You find yourself dealing with a salesman, not an independent professional.
It's that blatant sales pitch which makes the comparison with doctors and lawyers laughable.