Advice becoming more expensive

It now costs 50% to 100% more to provide financial advice than it did five years ago, says Warren Couillault, executive director of Hobson Wealth Partners.

Friday, July 7th 2017, 5:25PM

Hobson Wealth Partners is the former Macquarie Private Wealth in New Zealand, with $2 billion of assets under management and 30 advisers.

Couillault told Good Returns TV that advice was extremely important in financial services but not everyone knew they needed it, it was expensive to deliver and expensive to hire good advisers and researchers.

“The cost of doing business is high and increasing,” he said. “From a regulatory point of view, a systems point of view and a compliance point of view.”

Pressure on fees meant the revenue to pay for the delivery of the service was restricted.

“It’s a challenge in the industry to make sure we as service providers provide a service consumers need and want.”

He said investors with more money to invest did not have trouble finding advice but those with less could struggle. Some turned away from advice because it was too expensive, he said.

Couillault said the regulator had a role to play in educating consumers about why they might need advice. “Increasing regulation in the industry is part of the increasing cost of delivering the service.

“I would estimate a 50% to 100% increase in cost to provide advice in the last five years. Scale in the business is increasingly important so the cost of advice delivery can be spread over a larger client base.”

Roboadvice would play a big part in the sector in future, he said.

“If you’re looking at ways of getting advice across to a wider range of investors you have to look at all the ways. Everyone used to go into a bank branch to get cash out for the weekend. Now it’s all online or automatic payments. Different ways of doing things must include automated delivery in our sector.”

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Tags: compliance financial advisers Hobson Wealth regulation roboadvice