The Financial Conduct Authority (FCA) has raised concerns to advisers that recommend products that carry ongoing % of fees instead of the suitability to a product.
They have also raised the concern that advised consumers are choosing drawdown more than annuities compared to non-advised consumers.
The concern is that financial advisers are recommending products that pay an ongoing % fee to the adviser as this then boosts the potential value of the business when and if the adviser wishes to sell up.
Keith Richards chief executive Personal Finance Society has defended advisers and said, “Whilst the FCA focus on the few advisers that do this it could impact consumers wanting to seek financial advice”. Most firms continue to review their fees and understand the regulator isn’t dictating what you should charge just be able to demonstrate value to the client.
We charge set, fixed fees for our ongoing Money MOT service, we do not charge ongoing %. This means we are not that attractive to financial consolidators who see firms that have let's say £100m under management and are charging 1% pa ongoing adviser fees, i.e. an ongoing recurring income of £1m for doing not a lot. We have much more than £100m under management and but with fixed Money MOT service fees, we receive no where near £1m in recurring income.
This is by design though. We are not interested in 'ripping' investors off. We are interested in charging the correct fees for works involved and removing any risk of bias to ensure only best advice in the interests and future well being of our clients is given.