Only four of the 60 largest advice firms in the country give any indication of their charges on their websites, according to an analysis from a financial planner.
Candid Financial Advice director Justin Modray says that after reviewing the 60 websites, only Brewin Dolphin and Hargreaves Lansdown were found to publish explicit advice charges.
Vestra and Fairstone gave a general idea of likely charges, Modray found.
Modray says this is evidence that finance advice is “still rooted in a highly-paid sales mentality”.
He says: “The FCA heavily criticised the fund management industry over charges last November. Our opinion is that financial advice is far worse and still rooted in a highly-paid sales mentality.
“When the FCA banned sales commissions at the end of 2012 this offered hope for a fresh start. But old habits die hard and anecdotal evidence suggests many firms have used it as a welcome smoke screen to significantly increase their annual advice fees, typically from 0.50 per cent to 1 per cent.
“I say anecdotal because it is hard to prove when firms keep their fees such a closely guarded secret. It is still almost impossible for people to easily shop around and get an idea of what a financial adviser is going to charge them.
“Since advice fees can often run into many thousands of pounds, perhaps it’s no surprise that advisers with high charges like to keep quiet until potential customers are within a controlled face to face sales process.”
Modray called for the FCA to force advisers to list fees on their websites to stop the advice profession “from charging as much as it feels it can get away with, rather than what’s fair”.
The Yardstick Agency director Phil Bray says that publishing fees on adviser websites would have to be matched with what services were received to enable clients to make a meaningful comparison across firms.
Bray says: “There’s no doubt that increased fee transparency would be a positive step, as would making it easier for the consumer to compare adviser charges. I’m still undecided though whether displaying fees and charges online is the right solution.”
“Those advisers who display charges demonstrate a greater degree of openness, and transparency, and that they are prepared to go above and beyond what is required by the regulator. However, to be truly useful to the consumer, fee disclosure has to be accompanied by an explanation of the services available. Only once the charges and services are clearly laid out, can the consumer make a fully informed decision about the value they will receive from engaging with the adviser.”
“I’d also be concerned that consumers would naturally be attracted to the adviser displaying the lowest charges, ignoring other, perhaps more important, factors and giving a disproportionate weighting to costs, over other potentially more important factors such as value for money, knowledge and experience, adviser compatibility, when making their choice.”
“Should the regulator compel firm to display their charges online? I’m still on the fence. But if they do, they have to be prescriptive and provide a standardised format. If they don’t, we are bound to see, at least from a minority, an online battle to dress up reality as something more attractive. We’ve already seen this with the disclosure of regulatory status, which I firmly believe should be mandatorily disclosed online.”
Money Marketing is currently publishing a series of articles on adviser charging, and has set up a survey of the wider advice population to see how you are using their websites.