Fixed fees are nine times more attractive than percentage-based adviser charging, a new survey suggests.
3,000 UK workers were polled in a study commissioned by advice and insurance firm Drewberry.
Half said they would prefer to pay for “standard” pieces of advice, for example setting up a pension, with fixed fees.
This was twice as popular as the next highest option: returning to traditional commission. Hourly advice fees were the favourite choice among 21 per cent of respondents.
Only 6 per cent said they favoured percentage-based agreements, despite most advisers still charging on this basis.
Drewberry director Tom Conner says: “This shows that we still have some way to go as an industry to get the idea of fee-based advice across to the man in the street.
“Our results suggest that, by and large, Britons tend to lean toward the options that are easiest to understand. Just over half of Britons like the idea of ‘set fees’ for ‘standard’ pieces of work, for example, but many advisers have struggled to price their services in this way as there’s no such thing as a ‘standard’ client which makes fee calculation more complex.
“This also explains why, almost five years on from the introduction of fee-based advice, nearly a quarter of Britons say they would still be willing to pay traditional commission. To many, it’s still an easy to understand, painless, option. Despite its shameful track record, concerns as to commission bias haven’t really penetrated the zeitgeist.”
In a data bulletin in October last year, the FCA said that 48 per cent of advisers used percentage fees to cover initial charges, compared to 22 per cent for fixed fees, 20 per cent for hourly charges and 10 per cent for combined structures.