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Half of investors expect to pay less than £500 for retirement advice

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Around half of investors expect to pay less than £500 for retirement planning advice, according to research from Platforum.

In a survey of 252 active investors, Platforum found little evidence of an appetite to pay for advice, with 49 per cent saying they would pay less than £500.

Some 21 per cent expect to pay between £500 and £1,000, while just 9 per cent said they would pay between £1,000 and £2,000. A further 2 per cent said they would be happy to pay up to £5,000.

Platforum says: “This is a rather large gap to the fees charged by most advisers. Investors expect fees to be broadly similar to what is paid to an accountant and that a financial plan for retirement should take no more than one hour.

“The challenge will be to educate consumers about the value of advice and the complexity of the task of creating a financial plan.”

Of the investors surveyed by Platforum, 32 per cent said pensions savings would provide the large majority of income in later life, with 55 per cent expecting their pension to provide some income, with other assets also contributing.

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. Dominic Thomas 30th June 2015 at 4:57 pm

    When the FSA closed their final salary pension scheme, they offered staff £250 to seek independent financial advice.

    As with all surveys, framing is everything. If the question had been posed differently probably different results would have been observed… how much do you tend to spend on your car being serviced each year? how much does it cost to run your car? when you last bought your house, do you remember how much the agent receieved? if you pension is to last your lifetime, providing the income to live on for the remainder of your life, how much is this worth?

  2. If someone asked me how much I’d expect to pay for a Mars Bar I’d say about 45p, doesn’t stop me buying them even though they now cost well north of 60p. Pointless survey.

    Who exactly took part? The phrase “active investors” makes me hazard a guess that many if not all are self-service investors, therefore self-informed, therefore naturally unlikely to place a high value on advice.

  3. Great analogy Thomas. No client can query the value of good advice when it is put this way.

  4. To quote Oscar Wilde Now a days people know the price of everything and the value of nothing

  5. Like all surveys, (as I have said before) this is fundamentally flawed, and renders it useless. Just because you have some data to publish it doesn’t mean its accurate ?

    It always puzzles me when we get likened to other professions, in this case accountants; in that our fees should be similar, and a retirement plan should take no more than an hour !

    Regarding the first, personally I think, the piece is implying IFA’s and accountants jobs are pretty much aligned, however IFA’s and accountants are poles apart, in how we work, and just shows how people in general (FCA included) are ignorant to what we do and more importantly what we have to do, to net an end result, I have a very close friend who is a very good accountant and she is amazed ? no gob-smacked at the level of “time consuming input” (as she puts it) to do our job. She gave a good analogy (as a keen horse rider) ” every time a client engages you, you start to run the equivalent of the Grand National, Me ? most of the time I get to have a gentle hack around the country lanes” !
    Our fees are never going to reflect each other, then there is the process, the vast majority of an accountants work is automated, input into a computer and the result is generated ! well I’m not even going to go into the pitfalls, if we tried to get a computer program to give advice, could you imagine ?

    Secondly; I forgot the last time it took me an hour to do anything !! refer to above

    To sum up, IMHO, financial advice is cheap at the moment, if you take time to consider; time, expertise, process, and regulation ! the only reason its perceived expensive, is ignorance !

    As James pointed out above, people know the cost of everything and the value of nothing !

  6. Clients will happily pay this amount for what is actually guidance and planning rather than advice.
    Guidance and planning are not expensive to deliver.

    • JD ? why pay anything you can get guidance and planning for free !! and it is expensive to deliver 35 million is the budget for guidance and planning for the time being !!

  7. Christine Brightwell 1st July 2015 at 8:32 am

    Guidance and planning though can often be misconstrued as advice by those who do not routinely dabble in such things – maybe just better to stick with the Mars bar (other confectionery is available)

  8. Seriously, “a Financial Plan for Retirement should take no more than an hour” it takes at least that long chasing product providers to get information about existing pension plans”

  9. jonathan gamlin 1st July 2015 at 6:36 pm

    Most of us give a free initial meeting , or so it says on unbiased etc . Therefore we can give guidance and obtain information but if they want advice plus reports etc then they have to pay . The question is , what is a reasonable price to pay at this stage , down to our time and conscience I guess to come up with a fair figure

  10. James Hurdman 6th July 2015 at 4:59 pm

    An alternative way to look at it is that 30% of active investors are willing to pay between £1,000 and £5,000

  11. Jeremy Mugridge - Instinct Studios 31st July 2015 at 4:18 pm

    Clearly the industry is having difficulty in demonstrating the value of advice. Whilst this persists, customers are more likely to assign a lower value to the advice they receive – regardless of its quality.

    The advice that customers receive may well be spot on but generally the material that customers then receive from providers and advisers to explain their advice is way below what people expect these days. Fund factsheets and financial reporting generally looks like it was developed 15 years ago and this cheapens the whole experience in the eyes of the customer.

    Start giving customers an end product (probably digital) that’s professional, slick and easy to understand and we may find the perception of value starts to change. Stick with the bog standard, paper-led, uninspiring means of delivering information and £500 will always sound expensive.

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