The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants

Financial Services and Healthcare Industry Affected

By Dr. David Edward Marcinko MBA CMP™

[Publisher-in-Chief]

Starting April 1, 2012, financial advisors [FAs] are going to have to disclose fees for their services to retirement plan sponsors, according to changes to the ERISA rules.

But, as you may not know, advisor fees to retirement plan fiduciaries have gone unnoticed for decades because their compensation comes out of the service providers’ compensation.

Link: http://blog.registeredrep.com/yield_of_dreams/2011/08/12/stressed-over-fee-disclosure-look-to-service-providers-for-templates/

Are Medicine and the Financial Services Sector Similar?

Recently, while visiting the Wharton School at the University of Pennsylvania, and discussing same with several colleagues, I realized that this is not unlike medical provider fees which are typically paid for by a private or public third party insurance-like carrier. Historically, relatively covert to patients, but not so much today!

For example, in 2007, federal and state legislatures called for hospitals across the country to make their prices “transparent.” The term was defined as the full, accurate, and timely disclosure of hospital charges to consumers of healthcare, as well as the process employed to arrive at those fees.

Moreover, transparency does not merely involve publishing a list of prices and fees.  Essentially, hospital CXOs must be able to present their prices in a manner that is understandable to the general public and they must be prepared to explain the rationale behind their charges.

And, for the solo or small group medical practitioner, dentist, retail or direct care practice, is this a trend that is growing or declining?  

Assessment

So, where are fees for FAs, under the above scenario, headed. We know the answer for doctors, of course, buy why are the FAs so fretful? Is it because they fear a healthcare-like meltdown disaster?

And, why would any vendor [doc or FA] fear letting the customer / patient  know the price of his products or services? Aren’t there many companies who are a huge success, following just this business model; retail / wholesale anyone? Why fear telling folks what you charge?

Conclusion

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Filed under: Career Development, Ethics, Financial Planning, iMBA, Inc. | Tagged: commission based advisors, fee-only financial advisors, financial advisory fee disclosure, medical fee disclosure | 6 Comments »