3 in 4 Advisers Not Disclosing Fees Clearly

3 in 4 Advisers Not Disclosing Fees Clearly.

The Financial Conduct Authority (FCA) has issued s stark warning to financial advisers as  a whole suggesting that only 1 in 4 firms discloses its fees to prospective clients in the correct manner.

Two financial advice firms have been referred by the FCA to its enforcement division for failing.

The new fee disclosure rules, part of the Retail Distribution Review (RDR) started in January 2013 and still, the FCA estimates that 3 in 4 firms are either not disclosing fees properly or are simply quoting percentages of investment amounts e.g. 3% upfront plus 0.5% per year.

The regulator suggests this is not clear enough and financial advisers should be disclosing actual monetary amounts and giving clients a real estimate of fees on £’s and numbers rather than what appears to be common practice.

In addition, nearly a third of “restricted” advisers were not clear to potential clients that they are restricted i.e. they do not offer access to the whole market or the whole range of product advice.

Comment

We are whole of market independent financial advisers.  If you have dealt with us, you will know that we have always quoted fees in writing both by email and post before any work is engaged for.  Our fees are fixed for most types of work, set already based upon known costs and risk liabilities and all clients are aware of fees that we will charge in monetary numbers, “black and white” before proceeding. 

We know this transparency may have cost us clients with the risk of a client going elsewhere from time to time, because they get “hood winked” by unscrupulous tactics used by competitor firms and banking groups quoting percentages, but we will always our treat clients the way we like to be treated i.e.:  clear, fair and not misleading.

If a firm quotes % fees to you – ask yourself why they are not quoting you the actual amount they will charge/get paid.  Always agree a set fee with your adviser.