NZ Funds has been switching over to a fee-for-service model in its private wealth business for the past 18 months, using it for all new clients, including those brought across when other adviser businesses are purchased.

James said the level of client awareness of what they are actually paying their adviser is “extremely low”.

And he said despite concerns by some advisers that clients will baulk at paying up-front fees, his company’s experience has been largely the opposite.

“That’s how they pay for all their other professionals such as doctors, dentists, accountants etc.  Why a client with a million dollars should pay more than a client with half a million makes no sense,” he said.

“For high value clients it’s generally leading to a significant reduction in the amount they pay for advice which is appealing to people.”

James said a flat fee model allows advisers access to a wider section of the market, including those who may not have a large asset base but could still get good value from using financial advice.

“For clients with low current wealth if we can demonstrate what we are going to do for them and they are going to pay $1000-2000 it’s generally not insurmountable for someone who has a real and present issue around their wealth."

With the newly-acquired businesses “quite a few” clients didn’t want to pay the fee, but “generally speaking those who need the advice are willing to pay for it”.

Simply Business owner Tony Vidler said financial advice comes in three stages (planning, implementing recommendations and monitoring/servicing) and many advisers “give away” the first stage in the hopes of getting paid for the later ones.

“Is it feasible for the entire industry to switch over to fee-for-service? Yes.  Overnight? Certainly not. You’ve got to do it in stages,” he said.

“You have to begin by putting a structured service offering in place and working out what value proposition you wrap around that… once you’ve done that it’s a very simple step to put a value on it.

“I think for those where this is a relatively new concept they do tend to approach it the wrong way round.”