Advisers must make charging models as transparent as possible to turn around the public’s perception of the industry, says the Personal Finance Society.
PFS chief executive Keith Richards says potential customers have been turned off financial advice by “opaque” charging structures.
He says: “There is a common thread, coming from the FCA on its disclosure rules, from Government through the guidance guarantee, and consumer groups all have a clear view that professional services deliberately try to make their charging structures opaque to lure clients in.
“We have got to make some efforts to change that perception. We are encouraging members to consider how they structure their charges from the consumer perspective. Advisers are starting to look at the first stage of the process as a defined service for a defined cost.
“We are starting to see a focused review, for retirement or investments, that starts with a fact find and ends with a report on a client’s options, for a defined cost.
“That is opposed to advisers funding the initial meeting at their own expense, which consumer groups still feel is trying to lure customers in.”
Speaking at the PFS annual conference today, president David Thomas revealed the PFS would be publishing good practice guidance on how advisers should explain their charges through websites.
He said: “Our consumer insight panel has been invaluable in better understanding consumer needs. One example of that is research presented to us by Which? recently on the lack of transparency on adviser charging on adviser websites.”
At the same event BBC Money Box presenter Paul Lewis said too many advisers do not display fee information on their websites.