The mainstream press and now the trade press are full of comments and hand-wringing about the recent Which? report finding that the majority of financial advisers do not publish fees on their websites and are very reluctant to discuss costs before a face-to-face meeting. (For an example of the coverage, please go here).
As advisers we have tried to be transparent, with a fee comparison on the website, but internal discussions have shown us clearly that this is far from easy. (See here).
We are independent financial advisers, with a long-term advice proposition, so once you are with the “programme”, your recurring costs and service are easy to explain and quantify. Unfortunately, there is more than one potential road to joining our core advice programme, so there is considerable scope for things to get complicated.
We do not work on pseudo-commission, so you will not get a simple fee answer like 3.5% of the fund value; we have costed each element of the advice process to arrive at a base cost and we use that as our initial charge. This is designed to reflect our direct cost, with no cross-subsidy between clients or product types.
For a new client, we expect to:-
- Complete a financial questionnaire, understand objectives, establish needs and wants, collect and process changes of agencies, to give an average of 3 hours adviser time for £420.
- Research, reporting and presenting findings for an average of 6 hours adviser time and para-planner work for £840.
- Implementation of advice recommendations for an average of 4 hours administration time for £240.
- For analysis of existing investments, we expect to spend 1.5 hours of adviser time, giving a cost of £210 for each product area examined. For example, pensions or unit trusts or ISAs.
From the above, a new pension, investment, drawdown or platform product will be £1,500, all in. Where you have existing products and you want to keep, expand or replace them, so we need to do a transfer analysis, the fee is £1,710.
A number of consequences flow from our approach; for investable assets of more than £45,000, we will be cheaper than the mainstream; for larger portfolios, we will be significantly more cost effective, with no loss of quality; and finally for one off transactions, unless they are more than about £50,000, we are likely to be marginal on cost grounds.
In common with many other advisers, protection business, (life insurance, business protection, income protection, medical insurance), will be on a commission basis, with the commission paid by the provider, declared on the quote provided. We never take commission on indemnity terms, (take money up front from the provider), and we will explain why we suggest one provider over another.
Once you have investment assets advised by ourselves, we offer one service charter, but a number of levels of interaction, depending on your needs and the complexity of your affairs. For guidance, here are three common levels of interaction:
1. 0.5% annual fee, taken from the investment in monthly instalments. This provides for one formal review per year, adviser time to revisit your objectives and adjust your holdings to reflect changes in the markets, your objectives and your future needs. This especially suits two groups of clients, those who have fairly stable needs, probably growing their investments and the more sophisticated investor who is after an annual sanity check.
2. 0.75% annual fee, taken from the investment in monthly instalments. This provides for six monthly formal reviews, adviser time to revisit your objectives and adjust your holdings to reflect changes in the markets, your objectives and your future needs. This suits the majority of our clients, either accumulating investments or taking pension drawdown, as it balances cost and service to their advantage.
3. 1.0% annual fee, taken from the investment in monthly instalments. This provides for monthly interaction with your chosen adviser and works best for larger family trusts, complex pension arrangements, activities with a high welfare content and interactions with accountants, solicitors and other external advisers.
These are true on-going advice fees as they are not compulsory, but as you would appreciate, they offer excellent value if, like us, you believe that your investments need to be reviewed on a regular basis.
If your requirements are unusual, narrow or specific to a particular field or product, we will provide a formal quote after an initial appointment at our expense, as this appears to be the best approach, given the varied nature of our work. As a base, work on £140 per hour for adviser time and £60 per hour for administration. Almost everything will require a fact find and the associated activities, (£420), but the balance of the transaction will depend on your requirements.
If you would like to know more about how we can help you plan and realise your financial goals then contact us at firstname.lastname@example.org or call us on 01223 792 196.
The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of UK legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly no responsibility can be assumed by Martin-Redman Partners its officers or employees, for any loss in connection with the content hereof and any such action or inaction.