The short answer is that it varies from client to client, depending on how much time we would need to spend, gathering the necessary information about your existing investments and pensions etc, and importantly, researching the market to provide you with the best recommendations as part of our overall advice.
Since January 2013, IFA’s no longer receive commissions in relation to any products a client may purchase. This was a great change for clients, because it meant that the less scrupulous advisers could no longer profit from “selling” clients products which give them the most commission, rather than recommending the right product. The result of the changes has meant that most of the less scrupulous advisers have now left the market, because at the same time, all financial advisers had to re-qualify to new minimum standards.
Financial Advisers now charge fees for the work that they do for clients.
The level of fees are agreed at the outset before any work is undertaken and can be set either as a percentage of the overall level of investment, or at an agreed fixed fee, or on an hourly rate for the work done to produce the recommendations.
We normally work on an agreed fee, but can work on a mix of all three fee types, depending on your preference.
Fees are payable on completion of the research and recommendation report, regardless of whether you want to proceed with any of the recommendations or not.
If you want to proceed with a recommendation, then in some cases the fee may be paid by the Product Provider through an Advisor charge. This is effectively a deduction of fees from the initial investment into any particular product. It’s entirely down to your individual preference as to whether the fee is paid by cheque from your own funds or via an Adviser Charge. There is no difference in the level of the fee either way.
Once any initial advice has been concluded and recommendations implemented, you will usually enter into an ongoing Service Agreement with us, under which your individual circumstances and product suitability and performance will be reviewed periodically. However, you are under no obligation to enter into a Service Agreement.
A fee is payable under the Service Agreement and will depend on the level of service you require. It could be a simple service, like online access to fund platforms and telephone advice, or it could be more regular level of service, for example quarterly face to face reviews.
Interestingly, recently in the news we were told that that the biggest brands in the market are getting involved in a “price war” over fees. Schroders Personal Wealth are said to be “attacking” market Leaders St James Place and Brewer Dolphin to undercut their fees. The article in the Financial Adviser (26/9/19) claims that SJP’s advice fees are 7.95% for the first year and 2.95% thereafter. Brewer Dolphins fees were claimed to be 4.7% in the first year then reducing to 2.7%.
Schroders by comparison are pricing their advice and transaction charges at 3.65% in the first year falling to an annual fee of 1.9%.
So, how do these fees compare with Christina Clegg Financial Planning Services? Well first of all we don’t charge percentage fees for our advice or our ongoing service arrangements, we charge a flat fee according to the amount of work we believe we will have to do. We believe that is much fairer system of charging.
But looking at our most recent client, let’s call them Client X, for who we advised on 2 pension transfers with a total value of £300,000 – Our adviser charge was £3,000 ( or 1% equivalent), our ongoing service fee was £1,500 (or 0.5% equivalent), and the providers platform charges are 0.5%. So, the total charges were 2% for the first year, reducing to 1% in subsequent years.
If you look at Client X’s fees by direct comparison the charges would be as follows:
| ||Year One|| ||Later years|| |
|Brewer Dolphin *||4.7%||£14,100||2.7%||£8,100|
|St James Place *||7.95%||£23,850||2.95%||£8,850|
*These figures are those reported in the Financial Adviser (26/9/19)
As you can see there is a massive difference between charging on a percentage basis and charging a flat fee as we do. The more money you invest the higher the charges will be in monetary terms on a percentage basis. Of course, price isn’t everything and you should check other important factors like reputation, client reviews any recommendations, press etc before making a decision on which financial advisor you choose.
All fees and payment options are always discussed at the FREE initial meeting and there is no obligation to proceed to any level of advice after that initial meeting.
In the case of pension transfers we offer a Pension Review first to all our clients to help them determine whether they need to pay for advice.