IFAs hourly fees slide by 14
By , 11 Nov 14
Hourly fees for financial advice have slumped by 14% in the last year, according to a report by a financial adviser search website.
Hourly fees for financial advice have slumped by 14% in the last year, according to a report by a financial adviser search website.
Conducted in October by Unbiased.co.uk, the survey of 140 UK advisers cited an average fall in fees from £175 per hour in 2013, down to £150 an hour in 2014.
The drop in fees has brought the rates almost in line with the charges before the Retail Distribution Review (RDR) came into play at the end of 2012.
Senior partner at Mark Dean Wealth Management, Dean Mullaly, said: “I'm not so sure this trend signifies a longer term trend in adviser fees reducing, if anything adviser fees should be rising since RDR, as FCA fees have increased significantly and professional indemnity (PI) cover increases seem to be nearly doubling.
“I don't see advice as a cost issue for clients, it's more about trust. If a client has 100% trust in their adviser and the advice can directly benefit the client financially, then most clients would be prepared to pay the fees no matter what they are, within reason."
Mullaly points out that there is now increased pressure for advisers to justify the fees they are charging. "Obviously charging a higher fee than your competitors does not mean you are a better adviser," he said. "But as an adviser charging a higher fee than your competitors means you have to justify why a client should come to you rather than them.”
Lee Robertson, chief executive of Investment Quorum, said: “Charging for the provision of financial advice was bound to be fluid following the massive changes which many advisers had to contend with post RDR.
“I think these changes will continue for a while,” he said. “Fees will be more sensitive to these types of pressures than commission was in the past, and we will see changes ebbing and flowing in prevailing business conditions.”
Robertson said the spike in the hourly rate in 2013 could be caused by firms undergoing a process of “trial and error” as they moved from commission to a fee-based structure.
“I think people are refining their model as they have got some time under their belt after the implementation of RDR," he said.
“Charges are falling somewhat as advisers look to build solid long term relationships with clients based on service and value.”
Despite the slide in hourly fees, the cost of common advice scenarios has remained largely static over two years, with the fee for an initial financial review staying steady at around the £500 mark.
Chief executive of unbiased.co.uk, Karen Barrett, said: “As with any professional adviser, costs are only relevant in terms of the benefit realised. We would urge consumers to not only understand costs but also the level of service they will receive, so as to make a judgment on which adviser delivers best value for money overall.”
Tags: RDR | UK Adviser