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FCA: There’s no ‘magic number’ on suitable advice charges

The FCA says there is no “magic number” to decide whether advice charges are suitable as it urges advisers to look at whether clarity and quality of service is borne out in fees.

At a press conference in London today on the FCA’s business plan, Money Marketing asked FCA executive director of strategy and competition Christopher Woolard how advisers can judge whether or not their charges are suitable.

He said: “There’s no magic number,” and added “clarity and quality of service in relation to what clients are being charged” was what advisers should focus on.

Woolard said fair charges should make clear to the consumer whether they are being placed in a tracker or higher cost products in light of the findings of the FCA’s recent asset management study.

He said: “Are you clear clients are being invested through a passive type product or a more active way? Can you be clear on those things?”

Woolard added the FCA’s Advice Unit, which was set up from the Financial Advice Market Review to foster automated advice, would help firms offer lower cost services.

He said: “We are trying to see the development of a number of different price points where people get a number of different services to suit their needs.”

The FCA set out in its sector view on retail investments this morning that some advisers did not consider the total costs on the clients at each stage in the planning chain.

Woolard said: “Is value being thought about in the round rather than being thought about in discreet chunks?

“There’s a large amount that’s being paid for the vehicle to get to the asset…as opposed to the asset itself.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. Can we please ask these people to take a moment and think long and hard as to why……

    “He said: “There’s no magic number,” and added “clarity and quality of service in relation to what clients are being charged” was what advisers should focus on.”

    My advice charges have increased year on year for the past 7…… now my advice, my service, and clarity have not changed that much, in all that time…….

    Now, factors I have no control over, “HAVE”, levies, FCA fees, PI costs, RDR, time and complience to accommodate ever changing regalatory rules and guidance, more detailed reporting RMAR, and, PLEASE realise most of these things are almost impossible to forward plan for ?

    PPssttt Chris…. let me tell you a little secret, costs are not only for advice and service…. these two things take up a small amount of what is being charged, keep it under you hat, we would’nt want the consumer to know now would we ?

    Is advice as it stands from the view of “clarity and quality of service” value for money ? you bet your fat arse its not……

    Dont forget we have to feed a plethora of parasites who serve no “real” benefit…….

    The meaning of “art” is….. art has no other use other that itself ?

    The FCA’s in house decorater must be Damion Hurst !

    One more thing

    Who decides if advice charges are right or wrong if there is no magic number in the case of an audit, thematic review, S166, a complaint ? FCA, FOS, me, the client…….. or Paul bloody Daniels (god rest) “you will like this not a lot but you’re like it” …..

  2. DH – You are absolutely right. My staff’s wages have certainly all gone up over the last 7 years and my business rates following the recent Local Government review have gone up an eye watering 64%! Every other professional that I deal with over the last 7 years , solicitor , Accountant etc haves also put their fees up. These people who bleat on about us reducing our charges are living in cloud cuckoo land. The fact is that the number of advisers is continually falling at a time that demand for our services is rising. Any 16 year old studying economics will tell you that rising demand and falling supply of a service leads to rising prices.

  3. What a load of Rubbish ! Of Course there is a “magic number”, for advice. It is the amount of work and skill involved. Unfortunatley as a result of the FCA failing to regulate the insurance companies and banks have been ripping people off with poor quality advice poor service – for Huge Commissions – or their “Fee based”, percentage commission by any other name ( like auto enrolment and National Insurance. Interestingly insurance companies allow within their ” code of Misconduct the ability for advisers to charge what they like – at arms length so they fail their fiduciary duty of Care. Advisers know clients can “change their mind “, some for the most fickle of reasons – however a true Terms of Business and a committed adviser means the client obtains good, sound all round advice and on going payment by a willing client. Those who do not wish to pay can get passive investment and poor returns linked to their market with shoddy service and worse products. Put simply they fail to meet client outcomes.

  4. It must be very pleasant to sit in a magnificant office surrounded by staff without having to be concerned about how it or they are paid for. Plus of course not being held to account should things go wrong in your business and if you do need a bit more cash just increase your fee income by writng to your clients saying send me a few quid or else. Perhaps spending a bit of time in the real world would bring some sanity

  5. He said: “Are you clear clients are being invested through a passive type product or a more active way? Can you be clear on those things?”

    Could somebody please explain what on earth this means?!

  6. If there is no magic number then what the hell are the FCA blessing on about. All my costs have increased over the last number of years. I have also had to become “more qualified” and therefore I have increased the cost of what I charge to put in a position that I am still making around the same margins. All the FCA seem to want to do is to create problems which drive up costs (or reduce profitably) and harp on about wanting to bring down advice costs. Can someone please let me know what planet this guy is living on? All this crap about “Advisers not competing on price” (granted this was from another blog). Excuse me but WTF??? Price is not a good measure on its own without the value that comes with it. Possibly the FCA should sit down and take a really good look at exactly what is going on in the real world. You never know it might just surprise them

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