View more on these topics

Clients must be told the new story

THE EDITOR’S COMMENT OF THE WEEK

Online response to last week’s Robert Reid column on charging fees

I think Terence O’Halloran (see letter below) has hit the nail on the head. It is the fact that the prospective client is demonstrating that she preferred to know the conclusion before she committed to paying any fees.

In other words, she was not prepared to pay anything up front or advice and was prepared to pay more as a bundled fee for advice and implementation rather than pay for advice that she was not at that point sure she would take up.

I guess this is hardly surprising for inexperienced investors because what we do is so intangible. The problem is that the advice bit is what takes most of our time and expertise and so it is expensive and if our charging model is not to invoice prospects who do not proceed, then a cross-subsidy will be necessary from other clients.

The recent experiences of Terence and Alan demonstrate not only that we need to start practising our new story to prospects early if we are to perfect it in time but also that we need to think carefully about whether our charging model will be bundled or unbundled (or perhaps we can offer the client a choice, with the bundled version being more expensive to reflect the cross-subsidy)?

Elaine Birch

For the first time, I have had a £1m investor in Lincolnshire (not a common occurrence) ask for my advice and then refuse to pay our retainer of £65 a month to have a report completed before any investment decisions were taken. Ordinarily, she would have immediately been on our gold service rate of £237 a month but she is married to an existing client. She took the whole lot to NatWest Bank “because the bank’s advice was free and they only had a 5 per cent deduction at the point of investment”. Theories are great, Rob, living in the real world is a little different.

Terence O’Halloran

Recommended

15

ASA ruling does not excuse dangerous “free advice” message

It was, perhaps, always a long shot that the Advertising Standards Authority would find the Money Advice Service’s recent controversial advert had breached its rules. As the ASA had already rejected some of the more subtle but important concerns expressed by advisers and others who complained about the ad, and pressed ahead with a very […]

No hiding place

HMRC has returned to the issue of off-shore tax evasion, four years after it first took action on the issue. Last month’s deal between the UK and Switzerland, which will subject UK taxpayers with Swiss bank accounts to hefty fines if they do not make full disclosure, may mark the start of a renewed crackdown. […]

3

First peek at Aviva’s income protection TV campaign

Aviva has delayed its critical-illness TV campaign in favour of an income protection advert, which will launch on Sunday. The campaign will consist of 14-second idents and will air on ITV during period drama Downton Abbey. They tell the story of Gary (pictured), who had to leave his job after a motorcycle accident and received […]

Best preserved

The CF Miton special situations and strategic portfolios have been defensively positioned for some time now. We take a view on the wider macroeconomic environment and build our asset allocation from this basis. We have been bearish for a long time on the wider global environment and negative on risk assets such as equities, commodities […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment