Move over financial planners – the fee-for-service model is headed over to insurance, and that’s a good thing, say experts.
With capped commissions possibly making their way from Australia and the UK, advisors here in Canada are seriously facing the possibility of having to work under a fee-for-service compensation model..
In light of CRM2 there’s been a lot of discussion on Wealth Professional in recent months about fee-only and retainer advisor compensation models. That’s now transferred to insurance, with more than half of insurance agents in Canada estimated to be dual-licensed.
Toronto lawyer Allison Spiegel recently discussed her firm’s move from billable hours to a value-based flat fee model in Canadian Lawyer magazine. Lawrence Geller, a Toronto-based agent, posted a link to Spiegel’s story as a way to illustrate the pros and cons of going to flat fee compensation.
“Flat fee billing focuses on value, aligns the financial interests of the client and the firm, and provides cost certainty,” wrote Spiegel in Canadian Lawyer discussing how both models can coexist. “There is no reason why law firms cannot provide their clients with choices. Our clients may still choose the billable-hour model. When they do, however, it is a true choice, not because it is the only option presented.”
This sounds strikingly similar to many of the comments from financial advisors when it comes to the discussion of embedded compensation. Many, even those who are fee-based or fee-only, believe that the client is best served when they have choice.
Speigel’s firm, Spiegels Nicholls Fox LLP, added the flat fee model because it felt that clients wanted this additional choice and because it was something trending in the United States where new ideas often first develop. Lawyers up here, however, were loath to offer it because legal work is customized and not cookie cutter.
“Why are non-legal businesses capable of setting fixed fees despite the fact every business deals with unknowns?” wrote Spiegel. “Are legal fees incapable of being fixed or are lawyers afraid or unwilling to take the risk that they cannot accurately predict what will transpire?”
When it comes to fee-for-service Speigel’s legal example is proof positive that insurance advisors who introduce a flat fee model or something other than the existing system of commissions won’t be tearing down longstanding compensation traditions but simply providing clients with additional choice.
Choice is good.
In light of CRM2 there’s been a lot of discussion on Wealth Professional in recent months about fee-only and retainer advisor compensation models. That’s now transferred to insurance, with more than half of insurance agents in Canada estimated to be dual-licensed.
Toronto lawyer Allison Spiegel recently discussed her firm’s move from billable hours to a value-based flat fee model in Canadian Lawyer magazine. Lawrence Geller, a Toronto-based agent, posted a link to Spiegel’s story as a way to illustrate the pros and cons of going to flat fee compensation.
“Flat fee billing focuses on value, aligns the financial interests of the client and the firm, and provides cost certainty,” wrote Spiegel in Canadian Lawyer discussing how both models can coexist. “There is no reason why law firms cannot provide their clients with choices. Our clients may still choose the billable-hour model. When they do, however, it is a true choice, not because it is the only option presented.”
This sounds strikingly similar to many of the comments from financial advisors when it comes to the discussion of embedded compensation. Many, even those who are fee-based or fee-only, believe that the client is best served when they have choice.
Speigel’s firm, Spiegels Nicholls Fox LLP, added the flat fee model because it felt that clients wanted this additional choice and because it was something trending in the United States where new ideas often first develop. Lawyers up here, however, were loath to offer it because legal work is customized and not cookie cutter.
“Why are non-legal businesses capable of setting fixed fees despite the fact every business deals with unknowns?” wrote Spiegel. “Are legal fees incapable of being fixed or are lawyers afraid or unwilling to take the risk that they cannot accurately predict what will transpire?”
When it comes to fee-for-service Speigel’s legal example is proof positive that insurance advisors who introduce a flat fee model or something other than the existing system of commissions won’t be tearing down longstanding compensation traditions but simply providing clients with additional choice.
Choice is good.
