At the annual Personal Finance Society’s (PFS) conference last week Debbie Gupta, Director of Life and Financial Advice at the Financial Conduct Authority (FCA), asks advisers to consider their ongoing fees reflect the client's financial position.
The FCA director wants advisers to be aware that the way they charge their client is the best way for the consumer.
She said: “As clients get older, they become more vulnerable and their circumstances get more complex and we don't want to see long standing customers priced out of advice at a time when they need advisers the most."
Keith Richards chief executive of the PFS added: “the regulator is asking advisers to monitor their fees and ensure they are offering value rather than price."
This is very difficult to manage. Adviser fees should be based upon the time in servicing clients as well as the liability involved. We are not fans of the % of wealth under management model unless advisers are really adding value. How can a financial adviser charge 1% pa on a portfolio of £500,000 (that's a £5,000 pa fee unless they are actually doing £5,000 of chargeable time and added value each year? We favour a low cost, fixed fee approach based upon the number of plans we are looking after which is refelctive of the time taken in managing those plans, offering ongoing advice on the same as well as additional benefits that we offer in news, videos, articles, websire planning tools and investment updates/alerts.