• Fri
  • Jul 25, 2014
  • Updated: 4:15am

Commission-based model gives way to fees

PUBLISHED : Saturday, 25 June, 2005, 12:00am
UPDATED : Saturday, 25 June, 2005, 12:00am
 

DAVID THOMAS, director of Think Global Consulting, is convinced that major changes are on the way. Based in Sydney, he recently visited Hong Kong with a group of Australian financial planners to learn more about developments in the local market.


He said that about one in three Australians now had an independent financial adviser (IFA) and that the remuneration model for these professionals had gone from being 100 per cent commission to 100 per cent fee-based in the past 10 years.


'This came about partly because tighter regulations meant everything had to be disclosed to the client,' he said.


'However, it has proved beyond doubt to be a better model and produces long-term gains. IFAs are making more money and clients are happier.'


Mr Thomas hopes to educate Hong Kong financial planners in this respect and show them there is no need to be terrified of the fee-based model. His aim is to set up a scheme to pair individuals interested in becoming IFAs with a mentor in Australia who has already been through the process. This will involve step-by-step practical advice and exchange visits.


A secondary objective would be to make Hong Kong investors generally more aware of the opportunities in Australia. 'There is still a tendency to think of it as a high tax environment and to concentrate only on property. For offshore investors, though, there are many other options to explore.'


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