Industry split on fee for service

Of the 344 respondents, 32.6 per cent said the industry would one day make the move to fee for service, while 9 per cent were unsure.

Crawford Mortgage Services’ Elle McKenzie is one broker that is convinced that there is no future in fee for service.

“I don’t believe customers should have to pay a fee,” she said.

“After all, it’s the banks that get the business at the end of the day.”

Ms McKenzie said it made sense for accountants and financial planners to charge a fee, but not brokers.

“Financial planners and accounts can get away with it. All we provide is an advisory and comparison service, so we can’t really justify how much we’ve earned or saved a client,” she said.

Ms McKenzie’s comments were echoed by Frank Bardella from BM Financial, who believes the advent of the internet will stop brokers from ever charging a fee for service.

“Whilst every clients can get all the information for free from the internet, I can’t see the current stance on fee for service changing anytime soon.”

But not everyone agrees. Aggregation heads, including Vow Financial’s Tim Brown, believe the day will come when fee for service is the norm rather than the exception.

“Just like financial planning made the move to charge a fee for service, the broking industry will do the same,” he told The Adviser.

“While I don’t think this will happen any time soon, I do believe as more brokers diversify their core offering away from residential mortgages, the more likely we are to see the introduction of an industry wide fee for service model.”

Nationwide Lending’s Tom Osbourne, a veteran of fee for service, agrees that the day will come when fee for service is widely charged by brokers.

“I’ve been using it for 10 years and it works, if you can sell it,” he said.