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Advisers slam new advice firm over ‘low cost’ claims

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Advisers have slammed claims from a new firm that it offers a service equivalent to full regulated advice at a lower cost.

The new firm, called Flying Colours and launched by former Octopus co-founder Guy Myles, provides advice over the telephone and online.

The overall cost is between 0.5 per cent and 1.05 per cent.

This cost is derived from fund charges ranging from 0.11 per cent to 0.17 per cent, a 0.34 per cent platform charge and an ongoing financial advice charge of 0.54 per cent.

The initial advice cost for people who hold “complex” investments there is a “variable” charge of up to 2 per cent, capped at £6,000.

There is an ongoing financial advice and investment management charge of 0.54 per cent or £499.

The firm also claims a “traditional” IFA would, on average, charge 2.05 per cent, while a DIY broker would charge 1.25 per cent.

Flying Colours says it offers “all the benefits of traditional advice without huge associated costs”.

However, Informed Choice managing director Martin Bamford says the service is poor value for money, especially for sophisticated investors.

He says: “The 2 per cent variable fee for people holding complex investments or approaching retirement is in no way low cost, even if they are prepared to cap this at £6,000.

“What they charge for restricted advice should of course be lower cost than independent financial advice, especially as they will have lower overheads by not seeing their clients face-to-face.”

Investment Quorum chief executive Lee Robertson adds the service is “not massively different to much of what is available already”.

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. Fair play to him (Guy Myles) !

    Sounds like a recipe for disaster !

  2. My comments have been edited rather. What I actually said was “I know and like Guy. I believe that all new entrants are good particularly when there is such an obvious savings gap post RDR.

    I am not sure the pricing is massively different to much of what is available already but I wish them well. “

  3. Bare faced cheek. They should consider applying a 6% exit fee as well and giving everyone a glossy report every year, they’ll soon be one of the richest and most powerful “advisers” in the country.

    They certainly aren’t spending that money on search engine optimisation. On a search for “flying colours” they are below a bodywork repairer, a driving instructor in Stoke, a Dorset maths tutor and a foster care provider, way down page 2. Even on a search for “flying colours adviser” their website is below a completely unrelated mortgage broker. I guess that’s how they can charge as low as 2% per annum.

  4. These low cost models quickly disappear, just like cheapo platforms and wraps. I for one do not wish to join a race to the bottom. That sounds slightly rude actually……

  5. An “initial advice cost of between 0.5 per cent and 1.05 per cent” sounds very much like contingent charging, on which, I’d thought, the FCA frowns. Are potential new clients required to pay this upfront or is it dependent on them actually transacting business? What if they don’t?

  6. Big deal! I offered equivalent charges for full face to face advice including reports and valuations. Indeed for large amounts my funds under management charge was less.

    That’s the beauty of being small and watching costs.

  7. Stuart Rathbone 2nd March 2016 at 4:32 pm

    So what, it’s an open market. Their capital their risk.

    Not even that cheep, .34% & .11% to .17%. Looks like Vanguard on Nucleus or something very similar, not really very ground breaking.

    I’d happily work for .54% of £250,000.00 but don’t show up at my door with your annual ISA allowance and expect a warm reception. Hell I woud not even charge any more than 1% up front.

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