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RDR fails to dent consumer appetite to pay for advice

One in four consumers are willing to pay for financial advice post-RDR, the same proportion that were happy to be charged for advice pre-RDR, research suggests.

Based on interviews with over 2,000 consumers, Axa Wealth’s latest Big Money Index, which tracks consumers’ financial views and behaviour, found that 25 per cent of those polled said they were willing to pay for advice, compared to 24 per cent in 2012.

The research, carried out by YouGov, found that among those between mid 50s and 60s , who have a high disposable income and considerable assets, almost half, would be prepared to pay for financial advice. 

Among young professionals, 25 per cent would be willing to pay for financial advice.

Axa Wealth Elevate managing director David Thompson says: “These figures would suggest that pre-RDR concerns that consumers would be less willing to pay for financial advice as it became more transparent seem to have been unfounded.

“The number has remained consistent over the past 12 months, suggesting the RDR has not damaged the industry as some commentators may have feared.”

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. So 75% will not pay Does this not suggest that the 75% were happy to pay by way of commission but will now not seek advice. The future does not bode well for them

  2. Am I missing something here? Surely this survey simply tells us that 75% of people didn’t want to pay a fee a year ago and that pre RDR they may have had access to advice supported by the commission model. The same 75% of people still don’t want to pay a fee but now have limited access to advice, how is this a good news story??

    I don’t understand the logic behind suggesting that RDR has not damaged the industry as a result of this survey??

  3. It has always been a matter of transparency and truth.
    “Yes Mr Client if I take commission on this bond your £10,000 immediately becomes £9,400 and I will be taking £50 per year in addition. Over ten years I will have trousered £1,100
    Alternatively you can pay me a fee – I will charge £200 and still take the £50 per year – for which you have a choice. Take it from the investment or I can invoice you annually with the valuation. Over ten years the cost will be £700 a saving of 36% (£400). And of course you will have the full £10,000 invested”.
    Who but an idiot would then opt for the commission route?

    And as you say David – I have never had a problem with clients paying fees – even for life assurance. And I have been charging fees for over 20 years.

  4. Of course it hasnt changed the minds of those who were prepared to pay for it pre RDR that`s because they could afford it. What the article fails to point out is that 75% who paid for advice pre RDR by the commission route wont pay for it now. That means that millions of people who are not wealthy wont get any advice at all! This fact alone is going to have a terrible effect long term on the economy

  5. Bit of a non-article. IFA’s have been saying, since well before RDR, that those who can afford it will continue to receive advice because they have the money to pay for it. It’s those that were getting subsidised advice through the help of commission that are going to suffer. I have no problem with a fee model or a commission model as long as the cost of advice is clearly communicated to the client and the client has the choice on how they paid for it.

    What the survey should be trying to find out is how many people are willing to pay for advice but can’t afford it. Considerably more than 25% if you ask me.

  6. Axa Wealth Director David Thompson said :

    “The number has remained consistent over the past 12 months, suggesting the RDR has not damaged the industry as some commentators may have feared.”

    Another know nothing theoretic muppet spouting nonsense – 3 out of 4 people will not pay !

    By your own admission Harry you purport to deal with the 1 guy ignoring the other 3 so you miss the point !

  7. and how much are these 25% willing to pay ? I agree with Harry that it has always been a matter of transparency or lack of it.

    The vast majority of investors are NOT prepared to pay more than approximately £35 pa or £350 in TOTAL for a transaction. Those who really work on fee ( and there are very few who don’t operate on a product sale results in fee model) are not dealing with the majority.

    If transparency works ( and advisers will no doubt do a fine job to ensure that it doesn’t) then less and less will take advice.

  8. Harry Katz seems to be missing the point with his sales pitch. Before RDR he was saving his client £700. Since RDR he is costing his client £250.

    Commission was a benchmark by which those of us that charge fees could measure the value of our charges to our clients. Therefore we could be open and transparent AND show genuine savings.

    Thanks to the RDR we can no longer do this.

  9. @ Soren

    What a very warped way of looking at this. Perhaps statistics is not a strong point. I don’t have to compare with commission. Transparency is transparency. This is the charge – if you don’t like it go elsewhere. I don’t necessarily set out to be cheapest, but I know I’m pretty cost effective. It is the price allied to the service – if you don’t think I’m worth it – so be it. I don’t loose sleep. – nor will I starve without this person’s business. There are others who value my work.

  10. Hi Harry

    What a very strange comment (1:33pm) – it was YOUR earlier post that compared your fee to commission and went on to explain how great it was that you were cheaper.

    My comment was purely that I thought your comparison was a good one but that RDR has now removed this.

    BTW Do you actually understand what statistics are because most people would regard this as basic mathematics?

    Peculiar.

  11. Yes you’re right I see your point now. Sorry for being slow (or careless).

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