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On the level

Each year, the Personal Finance Society runs a member survey. We track a wide range of facts, views and RDR progress but also how well or otherwise we perform in the eyes of our members.

On this last point, it was interesting and rewarding to see a big increase in how members rated us, demonstrating success in converting members into advocates. Also of note is that our biggest advocates are the highest qualified.

There is a clear synergy between level of qualification and level of advocacy. This leads to another encouraging statistic – 47 per cent of those already at diploma level have the ultimate ambition of achieving chartered status (up from 42 per cent last year) so hopefully more advocates in the pipeline put pressure on us to keep improving the standard of member support.

The responses to RDR qualification-related questions showed members making good progress. We already know that 55 per cent of our adviser members are qualified to QCF level four and the survey showed that 82 per cent of those not yet qualified are taking the new diploma in regulated financial planning. Just 7 per cent intend to exit the advisory sector.

We did though add some new questions this year. The survey showed that 55 per cent of our adviser members holding a level four or above qualification have completed or almost completed their gap-fill requirement. This is good news and we encourage all members who complete their gap-fill to submit it for verification straight away.

This must be done before you can apply for a statement of professional standing and as every single submission has to be checked, it is the verification process that takes time. We have already issued over 500 SPSs and we are geared up to meet demand but please do not leave it to the last minute.

Moving from qualifications to the more opaque area of adviser charging, we asked how members were currently or intending to apply adviser charging. Respondents could select all options that applied and the results were:

  • Percentage of investment 67 per cent
  • Fixed rates 41 per cent
  • Hourly rates 37 per cent
  • Retainer fees 26 per cent
  • Not decided
  • 28 per cent

These results throw up a number of questions. With two- thirds looking to apply a charge based on the size of an investment, the first is how will advisers get paid for their actual advice? Will they charge for the initial advice, report and recommendations on a separate basis or will the adviser charge be contingent on the take-up of an investment being made? We should remember that one of the positive outcomes of the RDR should be that advice has a value and is worth paying for.

There is also the question of whether a set percentage is a fair basis. For example, should a client investing £100,000 be charged 10 times someone investing £10,000? Of course, in many cases, our members will be using fee structures that combine different options and variable rates. Whatever choice advisers make, together with their clients, above all, it must be a fair, transparent and a valued proposition – but also profitable.

Fay Goddard is chief executive of the PFS


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