At present, around 80 per cent of advisers base their charging structure on percentage of monies invested. This is slowly changing toward project fees or hourly rates, the case for which can be summarised as follows:
- Clarity and transparency for clients
- Removal of negative client perceptions about percentage charges
- Direct fit with other professional practices
- A method of charging understood by professional introducers
- All good back-office software has time-charging functionality
- All work is paid for and very little will be given away.
Of course there are issues about accounting and invoicing which may require different processes although the back-office software should support these.
Finally, the use of products and funds to facilitate fee-based adviser charging clearly supports the use of an hourly rate proposition.
David Shelton is the author of The Business of Advice book and website www.businessofadvice.co.uk