Sixth Deadly Money Mistake £60,000 or More Invested? % v Fixed Financial Advice
Published / Last Updated on 11/10/2024
The vast majority of financial advisers’ charge a % of the fund value of pensions and investments upfront (typically 2-3%) and then an ongoing % of the value for ongoing advice (typically 0.75% to 1.0% pa). This may compare less favourably with the smaller number of financial advisers that charge fixed fees upfront and then a fixed fee for ongoing advice.
We charge set fees based upon the average time involved to deliver the research, written report of advice and implementation as well as a small charge for the open-ended liability/risk that we take on. Som advice areas are higher risk than others so there will be a charge for this whereas for low risk/no risk areas of advice, we do not charge a risk premium. For ongoing advice, we charge a core fee for general services and then a fee per policy/plan that we review/advice on each year.
By way of comparison, we compared 0.75% pa and 1.0% pa ongoing advice charges versus our fixed fee ongoing (Gold) service. As you may note, for most people with more than £60,000 invested in pensions and investment products, they may be better off going down the fixed fee route for ongoing advice rather than % of funds.
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Do you have more than £60,000 invested in pensions or market investments/ISAs? |
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MOST ADVISERS MODELS |
OUR MODEL |
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% Adviser Charge Per Annum |
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Fixed Fee Per Annum (based on no. plans/policies) |
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Fund Value |
0.75% pa |
1.0% pa |
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1 plan |
2 plans |
3 plans |
4 plans |
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£60,000.00 |
£450.00 |
£600.00 |
or |
£551.25 |
£671.25 |
£791.25 |
£911.25 |
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£80,000.00 |
£600.00 |
£800.00 |
or |
£551.25 |
£671.25 |
£791.25 |
£911.25 |
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£100,000.00 |
£750.00 |
£1,000.00 |
or |
£551.25 |
£671.25 |
£791.25 |
£911.25 |
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£120,000.00 |
£900.00 |
£1,200.00 |
or |
£551.25 |
£671.25 |
£791.25 |
£911.25 |
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£140,000.00 |
£1,050.00 |
£1,400.00 |
or |
£551.25 |
£671.25 |
£791.25 |
£911.25 |
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£160,000.00 |
£1,200.00 |
£1,600.00 |
or |
£551.25 |
£671.25 |
£791.25 |
£911.25 |
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£180,000.00 |
£1,350.00 |
£1,800.00 |
or |
£551.25 |
£671.25 |
£791.25 |
£911.25 |
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£200,000.00 |
£1,500.00 |
£2,000.00 |
or |
£551.25 |
£671.25 |
£791.25 |
£911.25 |
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£220,000.00 |
£1,650.00 |
£2,200.00 |
or |
£551.25 |
£671.25 |
£791.25 |
£911.25 |
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£240,000.00 |
£1,800.00 |
£2,400.00 |
or |
£551.25 |
£671.25 |
£791.25 |
£911.25 |
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£260,000.00 |
£1,950.00 |
£2,600.00 |
or |
£551.25 |
£671.25 |
£791.25 |
£911.25 |
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£280,000.00 |
£2,100.00 |
£2,800.00 |
or |
£551.25 |
£671.25 |
£791.25 |
£911.25 |
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£300,000.00 |
£2,250.00 |
£3,000.00 |
or |
£551.25 |
£671.25 |
£791.25 |
£911.25 |
If you are already a client of Roberts Clark and FinancialAdvice.net you will already be aware of the benefits and transparency of fixed fee financial advice. As can be seen from our figures, most investors with £60,000 or more under management will be better off with fixed fee advice. It gets even worse, the larger your wealth is.
For example, an investor with £1m of pensions and investments could be paying £7,500 pa or £10,000 pa whereas we would charge no more than £911.25 pa for a client with say 4 pensions and investment policies worth a combined £1m.
FCA Investigating Value for Money for Ongoing Financial Advice Charges
Clearly, the FCA has the same concerns as we do for value for money on ongoing financial advice and servicing to the point that they have launched an investigation into the larger advisory firms asking them to revisit their charging structure, demonstrate how their charges have been calculated and to question whether they are offering value for money. We are aware of one large financial advisory and wealth management firm that has set aside nearly £0.5bn for the estimated 100,000 claims for compensation to come and another larger firm is rumoured to have set aside a similar amount.
If you are new to us, we suggest you talk to your existing financial adviser and find out exactly what you are paying for your ongoing financial advice and services.
