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How much should you pay for F.Planning

Discussion in 'Financial Planning' started by marion, 28th Oct, 2008.

  1. marion

    marion Member

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    Hi all

    I'm starting to think about the fees being quoted by the CBA/CFS FP to set up our Allocated Pensions due to be started next year after retirement. The commission has been quoted at 5% commission (one off) plus 1% yearly management fee. How can any money be made at these rates. Allocated Pensions products can only be obtained through Planners, is that correct. Asgard advised there's was only available from an FP.

    Regards
    Maz
     
  2. Young Gun

    Young Gun Guest

    You will generally have to pay some sort of "one off fee" for the advice of a planner. This covers their time and the strategic advice they have given you. However 5% is very high, but common for bank advisers who have no control over their fees. As a rough guide you'd generally be looking at a fee of between $1,100 - $2,200.

    is quite common, but if you have a significant amount of $$$ this normally decreases.

    incorrect, most industry funds offer allocated pensions and they are quite straight forward to setup.

    Honestly Marion the fees you quoted are high but as you have said in a previous post you choices for planners are limited. My advice to you would be to see another advisor for a second opinion. Look for one that isn't alligned with a bank as they have greater flexibility over how much they charge.

    frankly a 5% entry is highway robbery and if you lived further south you wouldn't have to put up with that.

    I know one or two advisors in NT that I can put you in touch with if you like.
     
  3. AsxBroker

    AsxBroker Well-Known Member

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    Hi Marion,

    You can the Financial Planning Association's Good Advice publication here http://www.fpa.asn.au/files/PubGoodAdvice.pdf

    The initial fee depends on the complexity of the financial plan. The ongoing advice fee is usually between 0.6% to 1% per annum.

    Young Gun suggests that an adviser may not have a choice of how much they pay, I would suggest that times are a bit leaner so they are trying to play catch up.

    Like Young Gun said, 5% entry fee is day light robbery and it sounds like the adviser is being opportunistic. Most clients south Darwin would pay based on the Value they receive.

    I would strongly suggest that you meet with a few other financial planners so you get a better understanding of what different planners may charge you. You could visit an AMP FP, Bank SA (are all banks really the same???) and an Accounting firm which also does financial planning. This give you a rounder experience and a few other planners to choose from.

    If you still have issues, let us know.

    Cheers,

    Dan

    PS Before making an investment decision speak to your FPA registered Financial Planner.
     
  4. marion

    marion Member

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    Reply to Young Gun on Financial Planning costs

    Don't get me wrong I have paid for a plan already and I don't mind paying for advice, but 5% is what I though everybody paid till I started on this forum. Now I'm thinking what am I getting for the 20k upfront plus the 1% per annum. In this present climate with funds going backwards you start to question cost as the AP would not be making any money at all just paying it out.

    I am moving to the Sunshine Coast in two week so I will approach other FPs there and get a better idea of the fees. Any suggestions welcome.

    Maz
     
  5. marion

    marion Member

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    Dan the plan has been paid for and I realise that an AP is supposed to last a life time and the constant attention from the planner/s goes forever but in this current financial climate and funds going backwards you really have to question the cost of it all.
     
  6. AsxBroker

    AsxBroker Well-Known Member

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    Hi Marion,

    Have you actually already rolled funds? As it is a contribution fee, it'll only be paid when you roll the funds.

    It makes it hard for constant attention if you are moving to another state.
    Certainly that high a cost to start it happening, I'd be questioning the cost at any time.

    The adviser should have figured out your asset allocation/risk profile, alot of clients I am seeing at the moment are just sticking the money in cash and Term Deposits in Allocated Pensions.

    Cheers,

    Dan
     
  7. marion

    marion Member

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    How much for F.P

    Hi Dan

    No two lots of funds. One house sale proceed. Which I can put in a TD with Macquarie but the tax will be bad as I receive a CSS Pension and my husband is still employed. Other funds need to be rolled on 23 Feb when my husband retires. We have told the FP it is to be TD or cash in an AP, but its the commission skimmed off the top that makes it painful especially as the house proceeds is only for six to 8 months.

    Cheers
     
  8. AsxBroker

    AsxBroker Well-Known Member

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    Hi Marion,

    What are you going to do with the house proceeds in 6 to 8 months? February gives you a bit of time to see other planners and get a broader idea of what you can do.

    Cheers,

    Dan
     
    Last edited by a moderator: 29th Oct, 2008
  9. marion

    marion Member

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    How much for F.P

    Hi Dan

    No house proceeds due in Nov going straight into Macquarie 8 month term deposit to fall due on 1 July 2009. Just have to pay the tax unfortunately but I will try to push the maturity date into 09/10 fin year.

    Will be speaking with FP's on the East Coast when we move in two weeks

    Cheers
     
  10. AsxBroker

    AsxBroker Well-Known Member

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    Hi Marion,

    You should probably be speaking to an accountant or tax adviser in relation to the tax, if any is payable.

    Cheers,

    Dan
     
  11. AsxBroker

    AsxBroker Well-Known Member

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    Me too Clayton,

    Did you do your degree at RMIT?
    Loved CFP...
    I'm in Sydney.

    Most of us try to contribute our knowledge to this message board on giving basis to help other members.

    Cheers,

    Dan
     
  12. clayton4115

    clayton4115 Member

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    hi,

    no i did mine at Griffith uni (it was a new course back then) yr 2000, yeah CFP was ok, enjoyed the degree more :p

    i enjoy FP, doing senior paraplanning work at the moment with another 2 advisers, worked for Westpac as a Planner, didnt like it, too pushy and too much sales oriented, so i gave up that went back to paraplanning as i enjoy the technical side of it, but i do have my Auth Rep in which i can give advise through the licensee.
     
  13. Alexandria

    Alexandria Member

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    5% is extremely high...anyway, commissions are going to be a thing of the past soon...I'm sure
     
  14. AsxBroker

    AsxBroker Well-Known Member

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    Hi Alexandria,

    As a risk specialist, doesn't your licensee get paid via commissions?
    Commissions are paid everywhere, real estate agents, car dealerships, etc.

    Realistically there is no "perfect" way to charge fees, it depends on what the client prefers, giving the client the options to choose is the best.

    Unfortunately the commission vs fee debate is the same as the property vs shares debate and they both just keep on going around in circles.

    Cheers,

    Dan
     
  15. Alexandria

    Alexandria Member

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    Yes, our dealer group does get some % of the commission. And this is also disclosed in our SOA.

    This forum is about fees on investments though, which is what I was referring to.

    If they got rid of commissions on life risk, it would be catastrophic for the industry, Australia is already under-insured...insurance needs to be sold, people don't just go out and buy it - and by taking away commissions they'd be making it much less attractive; to advisers AND consumers.
     
  16. Andrew Newman

    Andrew Newman Well-Known Member

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    Hi Marion

    With regard to Asgard products, it is true that they are only available through a financial planner.

    With regard to commissions, as a qualified financial planner, I would never charge an initial 5% commission for an allocated pension product. I would only ever charge a flat dollar fee (between $275 and $2,750) based on the complexity of the advice, the amount of research involved and the time taken to provide the advice.

    I also agree with Dan's comments about seeing a tax adviser and seeing other financial planners.

    All the best with your enquiries.
     
  17. AsxBroker

    AsxBroker Well-Known Member

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    I totally agree with you Alexandria.

    Unfortunately the legislated minimum is too low. Personally I think that automatic insurance should start with at least $250,000 and then it should scale down as age increases with the ability to opt-out.

    No one ever complains about paying the premium when a claim is paid.

    Cheers,

    Dan