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Adviser charging: Who is doing what?

The big distributors have (mostly) revealed their adviser charging tactics post-RDR. Sam Macdonald takes a look at what firms have put in place (see table below).


With the RDR now in full swing nationals and networks should be in a position to reveal the levels of their adviser charging propositions and the maximum limits they set for their advisers.

Perhaps worryingly, a number have declined to disclose this information with some saying they would not make their limits public.

Of those who have disclosed mandated adviser charges, there is a typical initial charge of around 3 per cent with ongoing charges ranging from 0.5 per cent to 3 per cent.

Personal Touch has the highest limit on initial charges in percentage terms at 7 per cent with charges capped at £5,000. Charges above £5,000 and ongoing charges above £3,000 will be reviewed by Personal Touch management before the sale is agreed.

PTFS says initial charges are run on a tiered basis with the 7 per cent maximum applying to lower investment amounts.

Money Marketing was initially told the PTFS hourly charge maximum was £350 although the firm now says the maximum is £300.

Towry only levies percentage fees for its fund charges with advice charged by the hour, with one free annual review.

Close Brothers, Towry and St James’s Place all have mandatory fees charged by all advisers.

Some firms set hourly fee maximums and a number of firms do not offer an hourly fee structure, saying there is little client demand.

Tenet does not set a specific upper limit but monitors charges. Distribution and development director Keith Richards says: “We have provided a reduction in yield guide demonstrating the impact on investment returns for all combinations of initial and trail, irrespective of how remuneration is made. Reduction in yield of over 1.68 per cent would require referral to compliance, although the majority of adviser charging submissions received before the end of last year were well within these levels.”

Sesame does not set any limits for advisers. A spokesman says: “We have guidance for firms to set their own charges but do not set any specific limits or fees as that is for individual firms to determine.” Sesame would not disclose details of the guidance.

AWD Chase de Vere head of communications Patrick Connolly says: “I would expect over the course of time some clients would move to hourly fees but as things stand I would say 90 per cent of our clients are looking for percentage fees.”

Consolidation firm Perspective allows charges of up to 3 per cent initial and up to 1 per cent ongoing. The firm, like many, says any hourly fees are up to individual firms’ discretion.

A Perspective spokesman says: “Perspective does not have an hourly fee per se. Where a client requires an hourly fee it depends on the experience of the adviser involved and as a group Perspective does not dictate that charge.

St James’s Place revealed its adviser charging structure in December which sees clients charged an initial fee of 4.5 per cent for bonds and 5 per cent for unit trusts, for advice and fund management, with an ongoing charge of between 2.1 per cent and 2.3 per cent.

Of that charge, advisers receive 3 per cent from the initial charge and 0.5 per cent ongoing.

SJP adds the bond adviser charge will have to form part of the 5 per cent annual withdrawal limit.

SimplyBiz chairman Ken Davy’s restricted national proposition Sandringham Financial Partners says its typical charge is 3 per cent upfront and 1 per cent ongoing. The firm says its typical hourly fee is £100 but there are no restrictions on hourly fees.

Last September, Foster Denovo launched its new advice structure through which clients are charged between £500 and £1,500 for full reviews and then charged up to 3 per cent initial and up to 1 per cent ongoing.

Foster Denovo also runs a lower level service called Select which has ongoing charges of up to 0.5 per cent subject to a minimum of £500 a year. Foster Denovo advisers can also charge an hourly rate if clients prefer of up to £300.

Intrinsic advisers charge between 3 and 5 per cent initial on investments up to £150,000, up to 3 per cent on the next £100,000 and up to 2 per cent on anything above £250,000. Ongoing charges range between 0.25 and 1 per cent and hourly fees range from £50 for an administrator to £400 for a chartered adviser.

Succession Advisory Services says it does set limits on adviser charging but would not disclose the details.

Lighthouse, Caerus, Bluefin, In Partnership and Positive Solutions also refused to reveal their adviser charging structures.

PMI Independent Financial Advisers director John Stewart says: “I think 3 per cent upfront is about right but if you are going to charge 1 per cent ongoing you need to be doing quite a lot for your money. I am wary of any firms refusing to disclose their adviser charging information.”

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There are 12 comments at the moment, we would love to hear your opinion too.

  1. As the old football chant goes…

    “Are you commission, are you commission, are you commission in disguise, are you commission in disguise…”

  2. What on earth is all the fuss about. Our fees are purely a matter between us and the client – end of. This is now an industry addiction (a bit like the “Chartered Status”). It is and righthly should be based around profit, without which we will all eventually not be able to meet Cap Ad requirements and will all be out of business. Who cares who charges what? It is of no interest interst to anyone except those who want to create journo headlines. Stop yapping and just get on with it. RDR has cost us all a fortune and is of little use to man (woman) nor beast especially not to clients as they will be paying more than before. It will not reduce regulatory costs and I predict it will increase these due to the extra level of supervison to be done to ensure compliance with the rules of RDR. It is amazing however that the overall average is set at 3 + 0.5pa. Wouldnt life have been so much easier if teh FSA had simply said to the industry – “Max commission (to include perks) is to be 3% initial plus a half trail” End of any potential bias issue (even though the FSA admitted they couldnt find any). I even agree with the qualification lark so the population would not have lost so many advisers, providers would have saved a fortune as would platforms and clients we would not have ended up with a ludicrous regeime with so many unintended consequences and so much conusmer detriment including the double charging debacle on advised top-ups. Who lets these people have jobs which affect so many people? Well done to the FSA. I just wonder at what meeting with the TSC will Martin Wheatley first state ” Wasnt me guv, it was my predecessors”. On that note have a good weekend ladies and gents.

  3. ‘We’ll charge what we want, we’ll charge what we want…we’re [insert name of said firm here] we’ll charge what we want…

  4. Article needs revsiting as you say SJP charges 4.5% & 5% respectively, then in the table its 3%.

  5. And there you have it …

    Nobody outside London even wanted hourly rate fees …

    There was nothing wrong with the commission system. It wasn’t broken …

    So, 3% initial and 1% ongoing it is for me …

  6. As one of the group of so called refused to disclose, how can you disclose when you have several hundred advisers, each is independent and has their own individual set of charges.
    No doubt, we all have a decency limit and from what I can see, I am certainly a lot lower than many of those listed, not cheap just earning a fair living. Most of us are also independent perhaps that is what this survey does not understand.

  7. Bit of a mess really isn’t it?

    Who could have conceived such a situation ?

    Oh, that’s right the FSA, the organisation tasked with maintaining market confidence !

    What market confidence?

    You have to admire the simplicity of the RDRs blatant task of reducing adviser numbers and increasing direct costs to consumers by instigating system of front loaded advice charges

    Wasn’t front loading outlawed some years ago?

    What goes around seems to keep going round.

  8. So your quite happy to (say with 1.5% fund costs) applly a 5.5% RIY in year one and 2.5% RIY ongoing?! Why not charge an upfront fee and let your clients funds grow unfetterd?

  9. RegulatorSaurusRex 18th February 2013 at 12:11 pm

    “no provider influence”

    Appears to equate to “no control at all”.

    No wonder I’m extinct….

  10. D&W Consulting 1st March 2013 at 9:10 am

    So RDR comes and goes and commission is simply rebranded as Adviser Charging? Good luck with trying to charge 3% initial folks

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