With more businesses exploring fee-for-service models, will this model become standard across the industry, or are we still a long way from moving beyond all-inclusive agreements?
It will happen at different paces at different times, but we will get there.
The shift is on for different service models. The transformation of this is 2 to 3 years if we start now, and some people have. If laws are passed saying commissions are gone, it could happen faster because committees will demand that.
It's interesting to study what happened when financial planning weaned itself off commissions and went fee-for-service. It took between one and three years. Some got there faster than others.
The members of SCA (ACT) have led the charge and said, "We're just getting on with it. We want government to outlaw commissions, but we're getting on with it". Some of the bigger firms in Canberra are really well down the track of eliminating commissions.
It will happen at different paces at different times, but we will get there. The question referred to all-inclusive fees. That might not necessarily happen. We may still have fixed fees for commodities and hourly rates for other services, but we need to move away from conflicts of interest payments, commissions, and related-party transactions.
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Michael is founder and chair of The Strata Professionals, a national franchise of strata management firms built on methods and procedures drawn from his 40 years in strata as a manager, researcher, and lawyer. His weekly newsletter, The Strata Professional, is read widely and advances his agenda for reforming and innovating strata management practice. Alongside his law degree, Michael holds a Master of Philosophy in Built Environment focused on mixed-use developments, and he's about to begin a doctorate at Oxford. His thesis, Towering Tragedies, explores how laws impact the quality of decision-making in buildings at risk of catastrophic failure from un-remedied defects.
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