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Apfa research: Advisers charge average £156 an hour

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The average hourly rate charged by financial advisers is £156 as new Association of Professional Financial Advisers research shows most have kept the same level of pricing since the introduction of the RDR.

The figures, compiled by NMG Consulting and published today, show 82 per cent of advisers have left their hourly rate unchanged since January.

It shows just 12 per cent have increased their rate and 2 per cent have lowered it. 

The majority of advisers charge £150 or less per hour of service, with 49 per cent charging £101 to £150 and 15 per cent charging £51 to £100.

Just a third of advisers charge more than £150 per hour with 26 per cent charging £151 to £200 and only 8 per cent charging £201 to £250.

Apfa director-general Chris Hannant says: “Despite adviser numbers falling and firms initiating new RDR ready business models, the majority of advisers have stuck to their initial pricing models.

“Many may have adjusted charges last year in anticipation of RDR implementation, but it’s testament to advisers that customers have had widespread stability on pricing so far in 2013.

“The average rate of £156 per hour provides the industry with a valuable benchmark. We are pressing the FCA hard on disproportionately high regulatory fees and we will track this average rate figure to ensure other financial pressures, such as regulatory fees, aren’t resulting in increased charges for clients.”

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. Assuming an adviser worked 40 hours a week and was paid for all those hours, the average adviser would be earning 300k+ PA.

    As we know this isnt the case, are advisers working far less hours per week, or are they not charging for some of the hours worked?

  2. @Alan

    I think it would be fair to say that we all know the answer to that. I myself have long been guilty of it.

  3. Misleading in many ways. This figure is not necessarily what the client pays and I am not sure that the FCA appreciates this with the RMAR rubbish. Depends what the work is, who does it etc. The actual average rate charged to the client is possibly half this figure.

  4. Alan, presume the £156 per hour is a gross figure (i.e. pre business costs and tax).

  5. Matt Worthington 26th July 2013 at 12:36 pm

    Alan, I presume that the over £300k figure would be the advisers turnover, not the take home amount/profit.

    Don’t forget to factor in the cost of office premises, equipment, admin/support staff, regulatory fees, insurances, marketing, training/CPD, exams and qualifications, car/fuel for client visits…

  6. Are you familiar, alan, with the concept of “costs”?

  7. @Alan
    Between four support staff, a building and compliance costs we need to generate the thick end of £250k per annum before we open the door.

    The widely accepted rule of thumb is that in a professional practice hourly rate is split 1/3 to the adviser/ lawyer/ accountant/ doctor; 1/3 to establishment/ support and 1/3 to profit. So the average adviser ought to be making just over £100k which for an average professional is probably just about right.

  8. A very interesting article and Alan’s response demonstrates how the wider public can misunderstand the reasons why advisers charge what they do…. the regulatory and compliance costs coupled with the cost of running a business are all met out of that advice cost.

    For some reason people associate the cost of advice as being the amount the adviser ‘pockets’ for their work…. in reality it’s very different.

  9. An average of this sort is about as useful as the fact that a person has on average 1.9 legs.

  10. or 2.4 children.

    I really don’t expect APFA or any other sensible people wasting time conducting research of this nature. Just leave it to the Regulator and the likes of Deloitte – they have nothing better to do.

  11. @ Alan, 12.10 pm

    The issue you refer to is know as “recoverable hours”. No profession achieves 100% recovery rates, and indeed many professionals are a long way from that level. Even doctors, who are able to send their invoices straight to the government for payment.

  12. I think in total I know 34 other advisers (some of these are within practices but the majority are OMB’s) in my part of the world and guess how many of them charge by the hour???? Yip, none. The reason being that they (and I) asked clients during 2011 and 2012 how they preferred to pay for our services when creating our propostions and the overwhelming majority voted for keeping it the same way as it has always been. Obviously Im paraphrasing here but it went something like this. “Take your commission (read that as fees) the same way as you have always done, ie when we buy something (or act on your advice as some IFA’s will prefer it to be phrased). If we dont like what what you recommend we wont do it and you therefore dont get paid”.
    I am a firm believer in “you should only get paid for providing something the client actually takes action upon” but then I am just an old dionsaur from the late 80’s so what would I know? I am now off to the pub to spend some of the 4.5% fee I earned on 4 Maxed out ISA’s and 45K OEIC all in the parents house of a client last night. Thats just under £4100. Total time taken to complete? Probably 15 hours. Oh guess that equates to £272 per hour. If only it was that easy all the time – Happy face—— Cheers chaps ( and chapesses)

  13. @ Marty

    At 4.5% it looks like your charges were set in the late 80’s as well!

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