Article by Phil
The simple answer is – it depends on what you need and the amount of work your Financial Adviser needs to do. But, there are different fees and charges for different parts of the advice process, as follows:
Initial Advice Fees
With most Independent Financial Advisers, the first initial meeting is free. At that meeting your Financial Adviser will talk to you about what you want to achieve, and your circumstances and will also go through their charges and how the process works. If you want to proceed, you will sign a Client Agreement and the fees will be agreed and documented.
At Christina Clegg Financial Planning Services, we work on fixed fees, which are set according to the amount of work we need to do. To give you an idea, our minimum fee is £1500 and our fee for Final Salary Pension Transfers, for example is £5000. Occasionally, we have charged more than £5000, but only where we have carried out a lot of work across multiple investments. These fees are for our Initial Advice and transacting any business which you may want to do following our advice and recommendations.
Ongoing Service Fees
We will then agree an additional fee for our ongoing service. This is a fee which is paid annually and covers further meetings at which we review your circumstances and the performance of your investments and make recommendations for any changes which may be required. The cost of our ongoing service fees depends on the number of review meetings you would like to have, this varies from our Bronze Service, which provides you with a review once a year, through to our Gold Service, which provides you with reviews every quarter.
In addition to face to face reviews, as part of our ongoing service package, you can also access details about your investments at any time online, through our website. We provide you with a log in and passwords to get you set up. Not all firms of Independent Financial Advisers have this kind of online facility. In fact, less than 35% of firms have online facilities like ours.
Product Charges
In addition to our fees for advice and ongoing service, you will also pay fees to your product provider. These fees will vary by provider, but are all disclosed to you before make the decision to invest. Part of our advice process, is to search the whole of the market to find the best product provider for your requirements, which takes into account a comparison of product performance over time and the level of fees charged.
Exit Charges
Some product providers will charge an exit fee if you want to access or move your money around. We DO NOT use product providers with exit charges, so you should be very careful to check that there are no exit charges before you make a decision to invest.
Why do we charge Fixed Fees and not a percentage?
Because we believe that is the fairest way. Lots of firms of Independent Financial Advisers, in fact the vast majority, charge their fees as a percentage of the value of your investment. We don’t think that is very fair.
Most firms will charge you between 4% and 5%. At 5%, if you wanted to do a single Personal Pension Transfer and the value of your pension was £200,000, the fee would be £10,000, but if the value of your pension was £400,000, the fee would be £20,000. Why should there be such a difference? The amount of work required would be exactly the same, regardless of the value of your pension – so why should you have to pay more?
We don’t think you should, which is why we work on fixed fees. This is a really important factor and one which really does set us apart from other firms.
Incidentally, if we were doing that straight forward single Personal Pension Transfer for you, we might agree a fee of say £3000 – NOT £10,000 or £20,000.
We heard the other day about a firm charging 4.5% for a £1m Pension Transfer, that’s a fee of £45,000!!!
How do you pay our fees?
There are two ways to pay our initial advice fees, either by giving us a cheque, or by the product provider deducting the fee from your initial investment. For example, your £200,000 Pension Transfer would become £197,000 after the deduction of our £3,000 fee.
Ongoing service fees are usually deducted on an ongoing basis from the value of your investments by the product provider and paid to us, although you can pay our ongoing service fees either by cheque in a lump sum, or monthly by direct debit.
Tips for checking Adviser Charges
- Ask whether they work on a fixed fee or a percentage
- Check their website for information about fees – they should be transparent and published
- Make sure the fees agreed are documented in writing
- Make sure you have a clear understanding of when the fees are payable and how they are paid
- Ask about hidden charges and exit fees
For more information please visit our website www.ccfps.co.uk or call us on 01282 614444
