Frequently Asked Questions

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In a commission-based model, advisors face the temptation to choose between investment options that may both benefit the client but differ in commission rates. This creates the potential for decisions that might not fully align with the client’s best interest. With a fee-based approach, however, the advisor’s compensation is not tied to specific investment choices. This allows them to pursue the strategy that truly benefits the client without conflicts of interest.

The financial advisory industry is increasingly favouring fee-based structures due to regulatory shifts and changing client expectations. Three factors drive this trend: the need to minimise conflicts of interest, a growing demand for comprehensive advisory services beyond product sales, and the rise of SaaS tools that facilitate portfolio management. Transitioning to a fee-based model helps advisors stay aligned with these industry trends, offering greater transparency and client trust.

The fee-based model supports a client-centered approach, compensating advisors for valuable activities like market research, asset analysis, personalised recommendations, and regular client meetings. This approach ensures the advisor is motivated to keep the client’s best interests at the forefront, with compensation that reflects the time and expertise dedicated to their financial well-being.

Commission-based advisors often rely on a steady influx of new clients to maintain revenue. By contrast, a fee-based model establishes ongoing service agreements, providing regular income from an existing client base. This consistency allows advisors to focus on maintaining strong client relationships, which is far more cost-effective than continuously seeking new clients.

With a fee-based structure, revenue is typically tied to a percentage of assets under management, creating a stable and recurring income stream. This dependable cash flow supports business growth, infrastructure development, and long-term planning, providing financial stability and scalability.

Today’s clients seek financial planning that goes beyond investment management. They want guidance that supports all aspects of their financial lives, including retirement planning, tax strategy, estate planning, and saving for children's education. 

Unlike transactional models, fee-based advisors focus on building long-term relationships and delivering holistic support. With recurring revenue, they have more freedom to prioritize ongoing client service over constantly pursuing new business, allowing for deeper, continuous financial guidance.

In commission-based models, the true cost of buying or selling investments is often hidden in complex documents, making it hard for clients to see the full picture. Fee-based advisors, on the other hand, provide regular, clear invoices, ensuring clients know exactly what they’re paying for. 

With a set fee schedule, clients can review and agree to services and fees upfront, giving them confidence and clarity in their financial choices.

Fee-based advisors are not driven by product commissions, allowing them to take a long-term, client-centered approach to financial planning. This model encourages advisors to build lasting relationships, creating financial strategies that endure beyond short-term market fluctuations. 

Additionally, fee-based advisors adhere to a fiduciary standard, meaning they must conduct thorough research and choose the best possible path forward for their clients, focusing on sustainable, long-term success.