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”.