A fee for service adviser bills the client directly and refunds any commission paid by the funds recommended.

All fees include 10% GST.

Our rates for preparing a financial plan are among the lowest in the industry, we believe that one of the key ways we can ensure clients achieve relatively high rates of return is to keep management expenses down as much as possible. we avoid recommending products with high fees, and do not charge high fees ourselves.

Here is our fee schedule:

Portfolio formation - initial advice

we give our clients a choice of fee structures. They are all variations on a theme: the charge is proportional to the time and effort that went into the plan, and not the amount of assets or other arbitrary factors that have nothing to do with me.

The three fee structures are:

1. Pre-negotiated fixed fee. Before we do any work on your plan we negotiate a mutually acceptable fee in dollars based on our best estimate of the total number of hours I'll spend on your plan. (This is our preferred option, and the one adopted with close to 100% of our clients.)
2. Hourly fee billing only for time spent writing the report, not for interviews, administration etc. We keep a time sheet, Compass Financial Planners Pty Ltd will invoice you appropriately. Our plan preparation hourly rate is $275 including GST. This hourly rate does not include the time spent in consultation with clients, on administrative duties or time spent talking to fund managers or government departments on your behalf. We bill only for time spent at our computer performing calculations and preparing the written report, a small fraction of the total. We bill this way because we don't want clients to think "the clock is ticking" during interviews. There may be several unbillable hours for every hour that is clocked, so the actual hourly rate is much lower.
3. "True hourly fee". If you want a "true" hourly rate where every single activity is counted (including phone calls, email, interviews, administration), our hourly rate then is $110/hour including GST. This should give some idea about how much time goes into each plan outside that spent on the actual report.

We greatly prefer to work on the fixed fee basis rather than either variation on the hourly rate. In the last 12 months only a handful of clients have chosen the variable hourly rate. The above three remuneration models are all supposed to produce a similar fee, one that reflects time and effort but nothing else.

The only real difference between the fixed fee and the hourly rates is that for the former we estimate the time spent on the plan and the price is guaranteed. This is our preferred way of doing things and if the plan takes longer to prepare than we had expected we will wear this cost. If you go with an hourly rate you may pay more or less than what we would have quoted you for a fixed fee depending on unforeseen factors.

The objective of the first financial plan is to help clients set up their finances in the most efficient manner possible, we discuss everything from setting up bank accounts to make optimal use of capital while still providing an emergency reserve, who's name to invest in, how to manage tax, how to set up a long term savings strategy, how to structure your estate plan (wills, power of attorney, testamentary trusts), how much insurance you need and how to get this at the lowest cost and more. Once the initial plan has been executed, annual reviews revisit each of these points to see what needs tweaking, but the focus tends to be on managing the investment portfolio.

For preparing a comprehensive financial plan, the minimum charge is $1,100 including GST. If you do not require a full financial plan, the minimum charge is $330 including GST. This is not an extra fee, it is the minimum fee for any job. Even non advice transactions take at least a couple of hours for me to complete.

We require a deposit of $550 to be paid in advance once you request us to prepare a comprehensive financial plan. If you change your mind and decide not to proceed with the financial plan after we have commenced work on it this deposit will not be refundable if we have already spent two hours or more working on the plan.

If any of the investments we recommend pay an up-front commission we will rebate this to you by reducing our plan preparation fee by an equal amount, sending you a cheque for any surplus.

Portfolio review - subsequent advice

Regular reviews are just as important as preparing an initial plan. Your insurance needs will change as your family grows older or your financial situation evolves, you need to keep your will and other estate planning measures up to date, your portfolio will need to be "rebalanced" and you'll have extra money to invest - or want to cash something in. We will recalculate your targets for superannuation savings and estimate how much you will have to pay in to reach your goal, we will also provide a review of the performance of your portfolio and help you decide if anything needs to be changed around.

We usually charge for reviews either by charging our hourly rate, or an agreed fee proportional to the work that needs to be done. Alternatively, a pre-negotiated fixed fee can be charged.

It is standard practice in the profession for advisers to charge a review fee and/or trail commissions regardless of whether or not you require a review to be actually performed. we are giving clients the option of paying the review fee, we will not charge this unless we actually carry out a plan review. A different rate can be negotiated if you require more frequent reviews than once a year or subsequent reviews may be invoiced at an hourly rate. The difference between our review fee and another adviser's trail commission is that we actually have to perform a service in order to earn a review fee, but most advisers will take a trail commission automatically.

Alternative fee structures

There is some flexibility to choose alternative fee structures to that above. In particular one needs to look at such matters as tax deductibility of fees and the nature of the advice being given. The proposed fee structures can be altered to take this into account, we believe this kind of flexibility to negotiate has the potential in some circumstances to provide mutual benefit for both parties. (For example, we might reduce some of our up front fees that would be considered capital expenses and increase tax deductible review fees accordingly, such an arrangement would make the total fees lower from your point of view, while not making any difference from our point of view. There are several other ways of making our fee system more tax efficient from your point of view).

Right to change fees

We reserve the right to change these fees for new clients without notice. Existing clients will be given a twelve month notice of any increase exceeding the rate of inflation. We guarantee that we will not raise our fees at a rate higher than inflation without first giving 12 months notice. The rates quoted on this page will remain current until 31 July 2003.

Anyone wanting to do business with me that would prefer some other remuneration structure is always welcome to contact me, we can come to a different arrangement if that will better suit your own requirements.

Other expenses

our fees are for preparing a comprehensive financial plan, but do not include every expense you may have to pay in implementing the plan.

The funds and (sometimes) wrap accounts that we use have their own management fees. We choose funds to a great extent on the basis of low management fees, but a small charge is unavoidable.

If direct investments into shares, bonds and exchange traded funds are recommended there may be a brokerage charge. We use discount brokers for executing transactions and do not receive anything for this brokerage ourself, you will pay the same for brokerage going through me as any customer of a discount brokerage service.

If a self managed superannuation fund, trust, company or other tax structure is to be created, or if legal documents like a Will or power of attorney are drawn up, there will be fees charged by an accountant or lawyer. If we receive any kind of referral fee we will rebate this to you against our fee for service, although we can refer you to an appropriate specialist you are free to use your own accountant or lawyer for the purpose. We will work with your other advisers to ensure that plans are implemented as agreed.

We do not have any reciprocal relationships with any lawyer, accountant or actuary. All interactions we have with these professionals are strictly arms length arrangements, we are under no obligation (contractual, social or otherwise) that limits our choice of adviser.

Annual tax returns are not included in our financial planning service. We can refer you to someone if you want, Joanna Kendall CPA can handle these in house and you might find this more convenient than dealing with several firms, but you can use your own tax adviser if you wish. Joanna does not pay me any kind of referral fee or reciprocate by sending her clients to me (she usually sends her clients to Graeme).