Over the last 3 or 4 decades, Australians have been offered investment advice that was either ‘free’ (where paid for in the form of commissions from product providers) or paid as a percentage of an investor’s portfolio. ‘Free’ advice should not be confused with professional services done on a pro bono basis. Adviser remuneration was so problematic for consumers and government policy makers that the laws have since changed and this practice has become illegal.

At the other extreme, investors have commonly been slugged with adviser fees of between 1% and 2% of their investment portfolio. This may sound relatively small, but the cumulative impact of this is astounding. Even where the advice was best in class, the charging of a % of assets is questionable as it can lead advisers to take bigger risks with your money than you would be comfortable with in the self-interested hope that your portfolio (and the resultant remuneration) will increases. It also begs the question of the additional work required for advising on a bigger portfolio (which is hardly the case much of the time).

Some might argue ‘you get what you pay for’ and that may be true in the short term, but markets evolve as do vendor offerings. In the 1990’s the Yellow Pages was a very expensive place to advertise but for many businesses, it was worth every dollar. With the advent of more impactful and cost effective forms of promotion, the value offered by Yellow Pages declined to the point that its clientele abandoned the product in droves.

When quality financial advice is priced fairly and reasonably, great outcomes ensue. Australian consumers are ready for this development and the time to invest in such advice is now.