There is currently no “prescribed” model for fee-based financial planning in SA (nor, for that matter, is there a definition of financial planner). There are many financial planners that refer to themselves as “fee-based” but when push comes to shove, many of them still earn commission. While there is nothing wrong with earning commission, it is mis-leading of them to claim that they are fee-based—so make sure you know how your financial planner is getting paid.
At The Financial Coach™ we only get paid directly by our clients for work that we do for them. This is all “pre-quoted” and both parties have agreed to the work as well as the scale of remuneration prior to commencement.
In many instances, we also place business for our clients—this is done through an affiliated company, MacConnell Sneddon Personal Wealth Management cc, that holds contracts with a number of financial service providers. In such instances, no initial commission is earned on investments or insurance (these savings are all passed back to the client) and in most instances, as a result of this, business is done at no initial fees.
Where clients appoint us in an ongoing advisory capacity on their investments we earn an annual advice fee on their funds. These fees are paid out of the clients funds directly to the planner. Industry norms range from 0.5% -1% per annum. At MacConnell Sneddon Personal Wealth Management cc, all our fees are 0.5% per annum and lower (depending on the portfolio size). Ideally, in a fee-based model, the client would pay these fees directly to the planner—practically, it is much easier to have these fees paid by the company (although we do have some clients who are happy to pay us directly).
