View more on these topics

Lee Robertson: Advice charges aren’t a black and white issue

I read Money Marketing news editor Justin Cash’s recent blog “Advisers should justify charges uniformity” with real interest.

He is absolutely correct in that the regulator is keen to understand the pricing dynamics of both advisers and fund managers and whether there is real competition among them.

I have written in this column before about my thoughts on fund management and platform fees, so will concentrate here on adviser charging.

Justin is also correct in his assertion that advisers who have embraced platforms and technology should have seen some costs savings and these should have perhaps been passed on to clients. Regulatory costs have also fallen to a certain extent, which he says adds further to the argument client charges could be reduced.

But while these are valid points, the argument around charging is a lot more nuanced than that.

Business owners will be well aware it is not just technology and regulatory fees that contribute to what it costs to run a company. All businesses are subject to lots of costs that are subject to market forces, some of which we have little or absolutely no control over.

The sheer cost of just staying in business continues to rise. Rent, telecoms, office equipment, insurance and stationery are all subject to upward inflationary pressures. Staff salaries, benefits and pension costs also continue to climb.

Quality marketing materiel, digital output and client events and collateral are subject to these same pressures. But they are all very necessary in the modern advice business. And at least the costs and efforts made contribute to greater client understanding and satisfaction.

Over and above all of these normal and expected costs comes the need to meet increased capital adequacy requirements. Then, perhaps the most vexing of all for business principals, there is the ongoing need to keep suitable capital reserves available to meet the dreaded Financial Services Compensation Scheme levies whenever they may be requested.

So it always seems like a bit of a “push me, pull you” situation around costs and charges. Good firms want to offer excellent service, and a quality communication and digital experience to clients, but at the same time maintain sufficient reserves for capital adequacy and unexpected FSCS demands.

I would argue that we are already seeing some moves towards the established charging wisdom referred to by Justin and the regulator. We are seeing fixed fee pioneers, either in totality or in part for specific client segments and activities. They may be rare but I suspect that, as was the case with the pre-RDR fee pioneers, once firms see what is possible and become more confident in their discussions around fees with clients, this trend will gather pace.

As ever, lots to think about as business principals. The charging issue is nowhere near as black and white as it may seem at first.

Lee Robertson is chief executive of Investment Quorum



Blog: Advisers should justify charges uniformity

Two real themes have emerged since the FCA published its business plan last week: competition and charges. The two, of course, are very much intertwined, the regulator’s theory being that focusing on competition will naturally drive value for money. For platforms, the regulator wants to look at the client acquisition and retention process. But for […]


A question of decency: How much is too much to pay for advice?

Advisers are being challenged over the appropriateness of ongoing advice fees as it emerges clients of major advice brands are being charged upwards of £60,000 a year for advice. Money Marketing has sought to quantify exactly what is being charged and approached 20 adv-ice firms for details of what they charge for ongoing advice and what […]

Royal Court of Justice High Court 480

FCA wins battle to ban convicted adviser

The FCA has succeeded in throwing out an adviser’s appeal against his ban. IFA Anthony Badaloo, a sole trader through Church Hill Finance, had permission to conduct both investment and home finance business. He also had interim permissions for consumer credit business. The dispute with the FCA centred around how Badaloo ensured his client, financial […]

State of the markets: global growth

In conversation with journalist Alexis Xydias, Artemis Global Growth Fund manager Peter Saacke discusses the state of global markets and how he is positioning his fund. Peter gives his views on the growth potential of US, Europe and emerging markets, each of which is on a different stage of the road to recovery. And with a […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment