While accepting that the risk advice industry needs to move to a fee-for-service model, business consultant Chris Unwin argues it is “more ethical” for an adviser to get paid a commission.
Speaking to advisers at a workshop in Sydney last week, risk advice specialist and Chris Unwin Training and Consulting Services director Chris Unwin explained the Trowbridge Report has put the wheels in motion for a change in remuneration structures that could see the industry eventually move towards fee for service.
However, Mr Unwin said he believes it is “actually more ethical” to get paid a commission than a fee for advice.
“As a commission-only operator, I only get paid if business gets done,” Mr Unwin said. "So therefore, presumably for business to get done I have to be giving reasonably good quality advice for [clients] to take it."
“However, if I am simply charging a fee for giving advice, whether they take it or not, then it doesn’t matter about the quality of advice, does it, because I am going to get paid anyway."
Mr Unwin also argued it “doesn’t really matter” whether an adviser calls what they earn a fee or commission; what matters is whether the client “perceives they are getting value”.
“I believe most of the problems around value and around fee for service that advisers have in our industry are in their head not in the client’s head,” he said.
“Clients are quite used to paying a reasonable amount of money for quality service and quality advice.
“If you don’t perceive the value you are offering and think you are being overpaid, then you have a problem. So you need to be quite clear what the value you actually represent to your clients is,” Mr Unwin said.