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Legg Mason: UK investors not prepared to pay going rate for advice

Wealthy UK investors are prepared to pay a maximum of £110 an hour for financial advice, a Legg Mason survey shows, 26 per cent less than the average fee charged by advisers in 2014.

According to Legg Mason, the cost of advice can range from £75 to £250 per hour, with one poll by unbiased.co.uk finding that the average adviser charged £150 per hour in 2014.

However, findings in the 2015 Legg Mason Global Investment Survey show that affluent investors are not prepared to pay that amount for financial advice.

Adam Gent, head of UK sales at Legg Mason, says: “The survey suggests there is a significant mismatch between what advisers charge for their services and what investors are willing to pay. This implies the industry has far more work to do to highlight the value of advice in an environment in which upfront fees have replaced the old commission model.”

The survey also reveals that 35 per cent of wealthy UK investors use an adviser, which is more than in other European countries but less than in the US, where 55 per cent pay for advice.

The key reasons given for using an adviser were to improve investment performance (48 per cent), to help avoid costly mistakes (46 per cent) and to access a wider range of investments (44 per cent). Only 27 per cent cited financial planning as a top three benefit of using an adviser.

Gent adds: “The survey also shows that investors appreciate advice for a variety of reasons, some of which are obvious and some less so. It is surprising, for instance, that there is a lack of desire among UK investors for a formal financial plan, but perhaps less of a shock that clients use advisers to help them avoid making mistakes when choosing their investments.”

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  1. Unfortunately investors are not aware of how much of their fees go towards regulators, compensation levies and PI insurance, if they did they may accept that our rates are realistic. If you take out these extra costs then the figure investors have arrived at are close to what firms actually receive net.

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