Experts have warned that mandating how advisers charge could leave certain clients worse off.
Speaking at the Money Marketing Interactive event in Harrogate earlier this month, CWC Research managing director Clive Waller, Threesixty Services managing director Russell Facer, and Informed Financial Planning managing director Kevin Ferriby agreed that in order to avoid conflicts of interest in advice, the FCA must continue to allow advisers freedom to set their own charges.
Waller says advisers providing financial plans to clients should not be forced to charge on an hourly basis, and this should not be seen as a lower value service.
He says: “A good adviser is so crucial to clients, it’s emotional, and it is about so much more than just the basics of money planning. Hourly charging is very tough for an adviser.”
Ferriby says working to clients’ characteristics is vital and shows a one-size-fits-all approach is not in keeping with best interests.
He says: “Some clients don’t want to have to commit to a certain fee. We charge an initial one but it has to be something that doesn’t scare clients off.”
The speakers also agree that other parts of the value chain should face greater pressure than IFAs to lower charges.
Waller says: “I can’t see advisers cutting fees and the pressure is then on platforms and asset managers.”
Facer says different models will continue to work for different situations.
He says: “More often that not it’s about the all-round support for a client and that is separate from and beyond basic money planning needs. There is still a bit of an industry focus on costs and products and profitability but it needs to align with what is right for a certain clients.”
Facer says managing internal risk while ensuring profitability will be a key challenge moving forward as the FCA continues to crack down on value for money and suitability.