More than a quarter of advisers are working longer hours than a year ago, a survey by Prudential finds.
27 per cent are working longer, according to the research. 4 per cent of advisers are spending more than 70 hours a week working, the equivalent of 14 hour days five days a week.
This figure rises to 6 per cent for mortgage advisers and 7 per cent for debt management specialist advisers.
Prudential director of specialist business support Vince Smith-Hughes says: “The rationale behind the survey findings is because of the demand for advice; they’re making more money because the demand for advice has gone through the roof.”
“With pension freedoms, we have moved from a place of annuities as the retirement income vehicle of choice, we’re now in a position where drawdown is the retirement income vehicle of choice…10 years after the introduction of pension simplification it’s as complicated as its ever been.”
At firms with more than £50m of assets under management – the largest in sample – 28 per cent are working longer hours, slightly more than the 24 per cent of advisers at firms with under £10m in assets who are putting in more hours.
Head of business consultancy at Prudential Paul Harrison notes that longer hours might not mean advice firms are more profitable, however.
“People are only making more money if they are charging by the hour; you might be working harder but you might not be more profitable.”
“If the work is taking you two hours longer you could say you are running at a loss.”
On average, the advisers in the survey charge an hourly rate of £157 an hour. Tax advice had a slightly higher average charge, £167 an hour, while mortgage advice cost a little less at £143 an hour.
Rise of the fixed fee
Harrison predicts that fixed fee models will increase in popularity in the future.
He says: “Over time fixed pricing will become a lot more prevalent. It’s clear, its transparent. As an adviser you can sit down with two enquiries, Fred and Bert, who are both similar, but you need to spend more time with Fred because he’s got more tax planning needs, say.”
“There’s a lot of scope for advisers to really think about their proposition and really think about their charging structure.”
More than one in ten advisers still work less than 30 hours a week, however, with 19 per cent saying they work fewer hours than last year.
On average, Prudential calculates that advisers spend 1 hour and 42 minutes on continuing professional development each week, and roughly the same amount of time on client meetings that fail to generate new business.
AKG Financial Analytics communications director Matt Ward says that over the long term robo-advice and fixed fees will put additional pricing pressure on the market.
Ward says: “In today’s world the problem is everyone is looking at cost…we have become extremely price sensitive. Post RDR we’ve moved away from commission to a fee. When a fee is placed in front of any of us if we have gone to see three advisers we have something to compare.”