Restrictions on commissioned work negatively impact fee consultancy.

In the current economic climate, financial advisors in Germany are adopting a hybrid business model, offering both fee-based and commission-based solutions to their clients. This shift is driven by a combination of factors, including the pandemic, rising product costs, and low yields, which have led clients to delve deeper into retirement planning and asset allocation topics.

The hybrid model is seen as a compelling way for financial advisors to proactively position themselves more independently. By offering fee-based services alongside commission-based ones, advisors can cater to a wider range of client needs and preferences, thereby enhancing their resilience in an uncertain economy.

The growth of fee-based consulting has been significant in recent months, with clients seeking further consultation for cost-effective and flexible investment solutions. This trend is not driven solely by regulatory pressure, but also by the desire of clients and advisors for more transparency and information in the financial advisory process.

The state, too, seems to favour a clearer appeal for personal responsibility in retirement planning. Discussions about limiting commission heights are taking place due to the current economic situation, with the aim of encouraging clients to take a more active role in their financial planning.

In the 2021 federal elections, the Free Democratic Party (FDP) and Alliance 90/The Greens advocated for a relaxation or reform of rigid first and second pillar pension models. They called for a shift towards more personal responsibility in retirement planning, reflecting a broader trend towards more flexible financial concepts.

However, it is not realistic to expect that the majority of financial advisors will switch to a fee-based model overnight. The transition requires time, resources, and a shift in mindset. Fee-based consulting offers new entrepreneurial perspectives, but it also requires a different approach to client relationships and service delivery.

Transparency and information are key to the success of a hybrid business model. Advisors must ensure that clients understand the benefits and drawbacks of both fee-based and commission-based solutions, and make informed decisions based on their individual circumstances.

In conclusion, the shift towards hybrid financial advisory models is gaining momentum in Germany. This trend is driven by a combination of economic challenges, client preferences, and regulatory pressures. While the transition may not be easy, the benefits in terms of transparency, flexibility, and resilience make it an attractive option for both advisors and clients.