Financial Advice NZ - Bring in the Experts - Clawbacks and your 'fee for service' charges - Shared screen with speaker view
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Kathleen Wright-St Clair
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Corinne Summit Financial Group Mudge
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Yes from sunny Cromwell
Bluff s amazing
Financial Advice New Zealand
Good morning everyone. Welcome to our 80th Bring in the Expert Webinars. You have all been muted and your videos turned off but feel free to ask questions down the side bar in the chatroom and in questions and answers. Katrina Shanks will ask the questions on your behalfEnjoy the webinar!
Sunny in lincoln
Cloudy in AKLD
Always beautiful in Wanganui
Hi Great day in Wellington
Did the adviser have evidence bank had formally declined? Or at least notes as to why they didn't meet criteria? (emails etc)
And it was 15 months later, not a "few months later"....
How much were FSCL's costs to assist to this level too, but the way?
So would this be noted as a compliant EG they would need to disclose this on their
Disclosure docs to clietns
I have stated on my invoices the ability to use debt recovery for unpaid invoices, do I need to also disclose this on my SOA in the same area I disclose what my cancellation fee is?
It’s not just time though. The cost of compliance and business running is huge these days and needs to be covered.
The hourly rate should include all operating costs including professional development, registrations, rents and wages.
Fee disclosure is not just in the engagement but should also be in the loan recommendation report so the client has been reminded twice about fees + claw back
no matter how good you are as an adviser will always happen, we disclose it 3 X and still happens odd time
Seems like everything is stacked in clients favour and its only getting worse
$250/hr for the partner in a law firm is very very cheap, way should a professional adviser change any less
Sorry FSCL, are we able to mandate a fee that is refundable, if they decide to use our services, i.e. $1000 to engage us for time based on valid approval being presented, and then if client decides not to proceed, we are able to retain fee. Please advise
Best check how she refinanced if she had lost her job, sounds like another dodgy bank or adviser smudging an application.
I believe till the time you disclose your fees and hourly rate it should be up to the customer to decide to deal with you or not, an advisor should have the right to decide their hourly rate.
We should always charge for advice and then possibly rebate this against and brokerage received.
You have said that an adviser charging a 'reasonable' fee is OK. Does this therefore mean that the commissions paid by a lender or insurer is often unreasonable?
Hi Nigel, possibly issue with this is "commission sharing" with banks, and that is the part we need FSCL/appropriate advice on I think
so what about real estate agents THEN!!!!!
Is this slideshow being sent out after?
As an industry we need to educate our clients that we are providing a professional service. What has happened in the past with advisers not charging is the past. Every time we do a deal we incur cost, time, compliance costs, group and crm costs. If clients refinance solicitors get to charge twice for their services when mortgage set up and then again when clients refinance, so they double dip. As an industry we should work togeather on this.
Shouldn't that be "some or all" not just some?
Can we please see the previous slide again?
Amen Paul ^. I've been charging a fee for service since 2001! The issue is a box tick approach v advice based approach. Finally the industry is waking up
I totally agree with Paul reg Double Dip. I feel that this aspect of claw back and fees charging should have been included in the new regime implementation for the industry as a whole and not worry about individual SOA
This long winded clause is almost word for word what we use. Not lost a commission clawback claim yet.
wow that great mine is good but will tweak it slightly now and I too have had no issues
Can we get a copy of good clause please?
can we have a copy of the powerpoint slide?
Financial Advice New Zealand
we can send the powerpoint to all attendees
so if we set an amount of say $2,500 maximum and a rough with the smooth approach is it necessary to also then state an hourly rate? seems to me you would do one or the other as there is only downside here for the adviser
I believe we need to change the narrative, its not a commission, the product provider pays the advisor, (on the clients behalf) a professional fee for service, so if the client cancels or clears a loan, they will be liable to refund the product provider for paying the original service fee. The lender already get clients to acknowledge the clawback for cash grants.
one issue is if the client refuses to accept the FSCL decision, the Adviser gets hit with a rather large FSCL fee that can then essentially wipe out the fee being charged.
Agree with you Liz
doesn't our membership cover FSCL involvement with a claim?
Agree with you Corey Rix
Agreed Corey, we’ve had this. Found in our favour and we has to pay the fee. Ridiculous
Ridiculous to expect client to cover full amount of commission - justifiable only for amount of time and professionalism/service provided.
Very helpful examples and explanation!
Could advisers survive by being paid $2,500 per mortgage or insurance? If not, then the charge needs to be higher
Can we charge for fee recovery? my main concern is from what I have seen, if the client understands the process in relation to complaining and therefore they know they can dig their feet in without impact to their position (although it affects us both monetarily and in loss of time)
If the loan recommendation report contains a breakdown of the clawback schedule form the lender in $ terms and the client initials then...
For sick commission - "As Earned" is the best option - it avoids writebacks
I meant do we need to disclose that we can use debt recovery in our SOA or not?
Vey helful tips to avoid complaints!
What does FSCL charge to investigate and rule on a case?
potentially up to around $3,000 I think
Hi Susan, if we are stating an average of 12 hours for certain type of application, are we still required to maintain time sheet for each application?
surely fees should be similar to fees charged by other professionals.
we certainly don't want the general public knowing what these fees are
no we don't...
GST is not chargable for mortgage advice.
Very helpful Tops, thank you!
• The new case investigation fees are:• Level 1 -$450 plus GST• Level 2 - $1450 plus GST• Level 3 - $2200 plus GST.
Hours can very from one adviser to another depends on their working style
Key points: 1. not reasonable to always charge the comm clawback amount as in not relevant to comm, ONLY hours spent (reasonable not pain felt, tick) 2. Debt recovery process: disclose within the NSA ("terms of engagement") and include interest as well and how costs are calculated for debt recovery, so there are no illusions that we are not an NPO (roger that) 3. $250 is top end of hourly rate - guess $100 > $250 including GST is probably about right? Further comments please. 4. "12 hours is 3 nights sleep for me now", but no real relevancy I guess... 5 to come next
What would you pay the partner with you legal or accounting firm?
@Paul I would check that, as advice is a service and subject to GST, while the client’s costs in relation to the product and the providers commission to you is not subject to GST.
I just has a case when within 8 months of a mortgage it was paid in full due to a property sale. Invoice was raised as per TOE , I reduced the fee as the client was protesting then reduced again to $750 much lower than the origional $3,000 she ahs sent an email stating she would pay the $750 after confirmation from FSCL. FSCL even though had seen all of the email correspondence would not reply to the client until they had officially opened the case and this triggers a charge to me
Investment advisers have the same issue with a non GST product and their feee advice being subject to GST.
we save every call record as well and does helps to build the clawback charges
File notes and recording keeping peeps….
@Leigh, about five time and then the rest ;)
You driving time … don't forget that too
sounds a bit like the employment court its a no win either way advisor pays
its all a lot of work and justification for the sake of not saying what it is, a bank claw bank. Clients accept the how and why it is charged but we are providing this huge area of grey by measuring time which we do not have the tools like accountants or solicitors to do so. Banks charge full cash contribution anytime up to the 3 years clawback timeframe!
All comes down to client fully understanding how we as advisers are remunerated - that should they cancel within a time frame we lose our income - and in this instance we would need recover costs for our time and professional services provided Time sheet mandatory throughout advice process NZ public don't have expectation for fee for service from mortgage or insurance adviser Need to educate them
5. keep clear record of time spent for retroactive reasons for complaints 6. FSCL try to encourage advisers to resolve within service recovery means themselves, early resolution team assist with this; if > FSCL ranges $450 > $2400 (right up to FSCL making a decision) 7. FSCL will ask for file, NSA, time records, try to resolve by agreement from there. Techniques to resolve at the early stages by taking a positive approach (Tui ad, yeah right), empathy then hit them with with it, that we disclosed, you pay - and my evidence will be better than your evidence. Don't get too defensive, spend more time explaining things, do we charge for that?!!
The lack of complaints is an indication of most advisers are taking clawbacks on the chin.Historically clawbacks were introduced to stop advisers churning home loans. So, the majority of advisers paid the price for the minority who churned from bank to bank or wrote over the top of loans that was fit for purpose for the sake of revenue. (as per Case 2)Roll forward to 2021 the issues are:Banks using a blunt tool to recover commission being clawed back without considering the circumstances and the overall persistency of the business arrange by the adviser.• Client sells property and the bank encourages the client not to use their adviser but deal directly with the bank. The bank retains the business, and the adviser receives a clawback.• The Bank (employees) still see advisers as the enemy therefore look to undermine the adviser client relationship. Its time for the Bank/adviser relationship to grow up which would assist with the level of clawbacks advisers receive.
Regardless of how good disclosure is clients perceive our industry as a free service and the banks see’s us as a delivery channel for their product but don’t necessarily want the client to continue to use our services again in the future.With new reg’s and the banks stepping away from the coalface we as advisers are doing more of the non-income and small income generating transactions because the banks don’t want to give advice. But when it comes to the big transactions their prepared to undermine the relationship which then potentially attracts a clawback.
But be kind... most important
Team of $5m - woohoo.
Great chat !!!!
Thanks Susan! Very worthwhile.
Can we have this chat where do we copy it?
Thank you both
A fee $2,500 cannot cover the workload and cost from a adviser provided. For a responsible adviser, the workload will go over 10 hours definitely.
Thanks Susan and Katrina!
Thanks so much, Susan - very worthwhile!
Wonderful !!! Thanks again.
Thank you for the session
Thank you so much!!
Thanks Susan and Katrina.This is a wonderful and really helpful presentation and sharing.
Thank you Susan
Kathleen Wright-St Clair
Kia Kaha Advisers
Thank you so much for a great insight Susan, and thanks for organizing this FANZ