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Which? research finds wide variations in advice fees

Which? has called for advisers to publish a rate guide on their websites in order to help people make an informed decision about choosing an IFA, after research showed large variations in the fees charged.

According to Which?, a survey of 200 advisers showed the average fee quoted to transfer a £10,680 investment into a stocks and shares Isa was £356, but one adviser in the south-east quoted £2,500 while two advisers in the south-west and the east of England quoted £106.

For transferring £5,000 into a stakeholder pension, the cheapest adviser charged £50 whilst the most expensive charged £2,500.

One IFA in the north-west quoted nearly £2,000 more to arrange a protection policy for a 30-year-old female in good health earning £30,000 a year with a retirement age of 65, than an adviser in Scotland quoted to do the same job.

The highest charge in this case was £2,100 and the lowest £120. The average fee quoted was £596.

Of the advisers surveyed, 89 per cent said they offered a free consultation.

Which? chief executive Peter Vicary-Smith says: “Financial advisers should be much more transparent in their pricing, providing details of all their charges upfront. At present it is very difficult for customers to know how much they are going to be charged, and what is reasonable.”

Jacksons Financial Services managing director Pete Matthew says: “I would never provide a quote over the phone because I then get chosen over another adviser on the basis of cost. Clients who obsess too much about the price of everything tend to see the value of nothing.  If the client obsesses too much about the price I am likely to politely point them towards another adviser. I do wonder if some of the more expensive IFAs out there are pricing to avoid just such prospects.”

Brunning Newman Houghton director David Brunning says: “We do not believe a fixed menu of charges is appropriate because each client is different. The figures quoted as the highest are pretty ridiculous but the lowest quotes are also mad, I would dispute that anyone can do a transfer into a stakeholder pension for £50.”

Which? has also put forward a list of questions it believes consumers should ask before choosing an IFA.

They are:

– How will the fees be charged?

– Does the IFA receive commission set by product providers? If so, how will it change this approach post-RDR?

– At what stage of the process will you be charged?

– How will you have to pay the fees, cheque or bank transfer?

– Are different fee options available to you for the service you require?

– What service are you receiving for the fees or commission? Initial or ongoing reviews?

– Will there be any ongoing commission or fees?


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There are 43 comments at the moment, we would love to hear your opinion too.

  1. Looks to me like the same question asked 6 times.

    WHICH? should mind its own business since it seems to know nothing about the advice process. If, post RDR, the client still isn’t getting enough information on fees then we might as well all pack up and go home.

    Perhaps WHICH ? would spell out its own agenda (stirring up the sh** to sell its highly biased in-depth (ha ha) reports). I have always believed that WHICH receives kick backs from product manufacturers to promote certain companies – perhaps WHICH ? will declare, without obfuscation, that they NEVER EVER receive any form of kick back so the public can be sure that their guidance is not biased.

  2. This seems like a very positive piece of research and can certainly be used to promote the openness and transparency of my own practice. I shall also use this against banks and direct sales etc in the same way.

    I have yet to find anyone who has an issue with knowing the cost of advice at the outset. As long as you have a clear process and service offering (and don’t over charge!) then clients seem to be ok with that.

  3. Another pointless bit of research by Which!

    It’s a bit like me publishing research saying “IFA research finds wide variation in cost of magazines” and then writing that an IFA has found that magazine printers are selling magazines for differing amounts. The IFA found that some magazines were being given away for free, while others were charging £5.

    What an absolute waste of time, money, and effort!!

  4. This is bound to happen, the way FSA regulates the industry. They could not care less about advisers! The industry is also to blame not being able to have sensible pragmatic regulations and accepting all what is thrown at them by the regulator. If they have made it fees based charging, ofcourse they will differ?

  5. No adviser should be charging less than it costs him in terms of all overheads, demands of the FSA, FOS and FSCS plus an allowance for the risk of retrospectively being judged.

    I very much doubt that could be done cost effectively for £106.

    On the other hand, deliberately pricing oneself out of business one does not wish to accept is a long standing practice.

    It is why many motor insurers charge ridiculously high prices for some risks and it is a technique I have used myself. It is a matter of commercial judgement and, as a boatbuilder I know says – if the customer doesn’t want to pay the price they don’t have to get you to do the work.

  6. Is it me or are Which barking up completely the wrong tree? Firms can charge what they wish in order to carry out their services; this is common commercial practice.
    Which would be better placed questioning why products and processes are so complex that such advice is required at all. Let me give them a brief insight into why things are as they are..
    The reality is that, the public do not and will not purchase pensions and asset-backed investments in the numbers required to sustain product providers needs, so as a consequence of their complexity, they have to be ‘sold’ by someone. If product performance had matched customers’ expectations over the years, then we would have a consumer base that would indeed understand and ‘purchase’ such products in sufficient volumes and effectively do the job cheaply for themselves and product providers. However, this is not the case and the much-vaunted alternative of doing nothing and leaving funds on deposit, falls far short of being the correct route for saving for your future is a poor substitute… This is where RDR is taking us, no doubt about that!
    So…and here’s the rub…until product providers find a way of being able to successfully encourage people to ‘buy’ their products (and God knows they have tried and failed enough times!). Then advisers are needed and whether for ‘selling’ such products (nothing wrong with that if it fits the needs of the client!) or advising people on maturing pensions/investments, they should be paid and paid well enough to feed themselves as well as the industry’s lazy parasites who, in their inability to face their public, prefer to survive on the back of advisers endeavours (and you all know who you are).
    So, the issue is not what the adviser charges, but what the adviser is charged and perhaps Which would be better focusing their attention on this area, rather than berating advisers for doing their job (and that of so many others in the process!).

  7. Its about time that IFA’s valued their years of experience and training. Don’t undersell yourselves. The public undervalues the service offered so don’t give it away. £106 for this advice? That’s a disgrace.

  8. If Which are going to present price comparisons, at least undertake them in a mature way. Quite honestly, if a new client came to me for advice about transferring a £5,000 stakeholder pension, I too would “price to avoid”.

    In the same way that if I was in the process of buying a 1 bedroom investment property for £30,000, I would not go to a London City law firm to ask for a quotation.

    RDR is not just about the new world of fees against commission. It’s about a service proposition/offering from advisor to client.

    It’s a real shame that Which didn’t highlight what the advisors/firms were offering for the fee being quoted.

    Why do Which always insist on only showing bottom of the barrel business, instead of comparing a more realistic size of business.

    A very interesting and timely subject matter, presented with the usual out of touch manner by Which.

  9. Non of Which's Business 14th January 2012 at 2:46 pm

    YOU pushed for RDR and fee based charging and you got it. Different businesses charge differing prices (called competition). You shop in supermarkets and pay the price asked – no cartels here? Solicitors, accountants et al charge differing fees, so why stick your noses in here. You got RDR, so live with it. Remember when your ‘consumers’ are paying over the odds or getting ripped off by the banks, you pressed for it instead of a standard commission charge . WHICH = IDIOTS!

  10. Indicative fees on the websites is a good things. It is good for clients to make an informend decision before they call an IFA.

    At the end of the day, we need to have similar prices, as solicitors & accountants do.

    For bespoke work there is another mather, but for simpler things like a £10,000 annual pension contribution we need to have uncovered fees.

  11. David Trenner - Intelligent Pensions 15th January 2012 at 2:39 pm

    I totally agree with Pete Mathew.

    Do lawyers quote their fees? Or accountants? Or dentists?

    After 2013 Which will not be able to moan about commissions so they will turn their attention to fees. If someone is only worth £50 an hour they clearly are not going to be very good!

  12. What a load a rubbish, don’t Which realise that in a democracy prices will vary? What they want is a socialist set up where all prices are set centrally!

  13. Of course there are variations – IFA’s in different parts of the country have different costs.

    Two questions I would ask Which? – do accountants and solicitors in different parts of the country have different rates – I bet the answer is yes. Also did their ‘research’ take into account the qualifications of the advisers involved – if not it is like trying to compare a book keeper with a chartered accountant.

  14. This is the organisation that raved about endowments…. then changed it’s mind after the problems began to emerge..

    Suggest you jokers stick to looking at spin speeds on washiong machines; that’s about the analytical strata you belong in.

  15. Firstly, I was shocked at some of the prices that advisers are charging for very basic advice such as ISA transfers. The one’s who were caught charging £2,500 should be prosecuted, because as far as I’m concerned that’s theft.

    I’m also shocked by some of the comments from supposed “IFA’s”. – Isn’t it also funny that the ones who are opposed to RDR are also the ones that think Which? should mind their own business.

    We are a high net worth Wealth Management business who charge 3% on new investment monies, and 1% subject to a minimum of £275 on any switches/transfers etc that we advise on.

    We are RDR compliant, efficient and profitable. -You don’t have to be a crook to make money from this game.

    I truly hope that the majority of the people who commented on this article are the ones that meet the executioner’s axe come RDR, hopefully kicking and screaming.

  16. oh dear – the “holier than thou” brigade are out (ADB)

  17. The comment from A.D.B. says it all; yes wouldn’t it be nice to be in the position of a Wealth Manager for HNW clients and make a decent living. Many clients are not in this bracket and given the examples quoted in Which, I doubt whether A.D.B would actually deal with them. I am quite happy dealing with ‘ordinary’ clients who need advice on protection, savings, pensions and house purchase. This report from Which will only drive them away. Ohh, just a thought, commission is the bad boy so can we charge clients for a clawback? Ever thought how much your clients cost your business? Can Which look into our costs? We never sold Keydata, can we have a refund?

  18. Your both wrong there I’m afraid – ISAs are our bread and butter, however, I totally disagree with the arguement that because YOU need to make a living, you can justify charging YOUR client’s for basic advice.e.g. ISA recommendations.

    By all means charge a minimum fee for low value business such as the £5,000 stakeholder contribution mentioned in the Which? report. But some of the prices mentioned there are nothing short of a total disgrace.

    Your clients do not owe you a living, If your business is unable to make money by providing a fair, honest and compliant service, then either change your business model, or change your career.

  19. *Justify charging inflated prices for basic advice.

  20. ADB – the only way charging £2500 for a £5000 transfer is theft is if the client actually paid it! have you considered that the IFA was out pricing themselves as they didn’t want the business?
    What I dont understand about the whole article is why is this even news? Shock horror, different companies charge different rates! Each year when i renew my car insurance i get different quotes and guess what Which, some of the quotes are astronomically high and i dont pay these, i pay the charges i think are reasonable, but i must be wrong and we should all be paying exactly the same rate of insurance irrespective of age, experience or where we live.
    Please Which get back to writing about kettles and stop writing useless articles than have no relevance or substance.

  21. Veronica Veronica 16th January 2012 at 1:14 pm

    If I was looking for a pair of shoes and did it via an internet search – I’m sure I’d know which one to buy and which one would fit if all I did was compare the price….?
    Come on Which – life does not work like that!

  22. “We are a high net worth Wealth Management business who charge 3% on new investment monies, and 1% subject to a minimum of £275 on any switches/transfers etc that we advise on”

    We are so professional we have no need to use an apostrophe, especially when castigating those non NME advisers.

  23. Anonymous – Please accept my apologies.

    I’ll tell you what, you can give me grammar lessons, and I’ll teach you how to run an honest and sucessful IFA firm.

    What do you say?

  24. Whatever happened to free market economics and the liberty of customers to shop around for the deal that suits them best?

    Not that the FSA ever seems to shop around for the best deal on anything, but then when you’re spending OPM, who gives a toss?

  25. Why would I want to run an IFA firm?

  26. Anonymous 2.13pm…Excellent reposte!

    ADB…He/she who assumes…Well, you know how the saying goes. By the way, congratulations on being so excellent, a skill I have failed to fully master in my 25 years in practice…No complaints as yet though!!

  27. Doh! Riposte… Told you I was not very excellent!

  28. Basically 3 pages of everything that is wrong with industry, including why client’s wouldn’t trust most advisers as far as they could throw them.

    I’ll sleep safe in the knowledge that RDR will help to weed most of you out of the industry.

  29. A.D.B = Arrogant, Discourteous, Boorish

  30. ADB..Bless, the dummy has fallen out already.

    Well that wasn’t much of a test of your character!

  31. Do ‘Which’ ask for the same from accountants, solicitors, or even gardening or cleaning services? No. To publish fixed fees where appropriate is fine but unless I have lost something in all of this then I need to know my client and know what they want to achieve. In doing so I can then establish what work is required and what the cost of that work will be. I then openly and completely transparently advise the client of this and unlike most of these unaccountable commentators, I respect my clients enough that I believe they can then make a value judgement themselves, and if I am too expensive they are free to go elsewhere.

    Is it so completely wrong to allow the consumer to be a ‘consumer’ who has just the slightest bit of intelligence?

    Oh and ‘Which’ please do not preach to anyone when a visit to your website will clearly indicate you work on the inertia approach of offereing a banner of ‘sign-up for £1’ and then put in small print at the bottom of the sign-up page that after a month the cost will increase to £9.75. We all know you rely on people not bothering to cancel !!!

  32. I think that most of the people making comments are missing the point of the Which survey. I don’t think that they are saying people can’t charge what they wish. I think they are saying that advisers should have a example scale of charges so that people can make a comparison if they are shopping around.

    The danger of their approach is that they are trying to view advice from a transactional perspective and that people will always go for the cheapest quote. As we all know cheapest is not always best and people should look for value for money and not just the lowest figure quoted.

  33. A.D.B.

    Well I know who I would prefer to work with – any openings ADB?

  34. So banks charging high levels of commission = “disgraceful”, IFAs charging 50% fees = “pricing themselves out…probably.”

    Interesting attitudes.

    If an IFA doesn’t want the business, then – surely – they can say “no.”

    Taken at face value – which few of you here are admitting may even be the case – it is simple greed. And the responses here hint at a touch of hypocrisy.

    Any story about the FSA / Banks / providers is leapt upon – often without reading beyond the headlines. Here? Any straw is being grasped at.

    Feedback’s a gift. If there’s something wrong with the way you’re being perceived – do something about it. you’ve got trade bodies. Run your own “realistic” research across a representative fund size. Publish the results. If you dare.

  35. Regulated Claims Management firms have to set out their fees on their websites and in initial letters and their work is difficult to quantify in advance.

  36. I don’t know what all the fuss is about? I spoke to an IFA that I saw advertised on the TV and they didn’t charge me a thing, they said their advice was unbiased and free.

    They were called the Money Advice Service.


  37. Martyn Sinclair – Thank god one person recognises, that most of the “advisers” who have commented on this article, are the exact reason why we as an industry get a bad rap. – There’s hope for us yet!

    Unfortunately, for those of you who wish to compare yourselves to Solicitors and Accountants, I have some bad news. At the moment, in the eyes of the consumer, you are more comparable to Builders.

    Undoubtedly there are good, reputable builders in the UK, but for every 1 of them, there are 5 cowboys. – Sound familiar?

    If not, have a quick read through the majority of the comments left on this article and if it still isn’t ringing any bells, then it is likely that you are one of the “professionals” giving the rest of us a bad name.

  38. who cares what which thinks or says,,my mother in law takes the magazine every month,and belives every word it says.

    she is a right pain in the backside,and i would not have her as a client for love nor money.

  39. Tickled Pink to see IFAs squirm (Bring on the RDR) 17th January 2012 at 7:02 pm

    Ha Ha.. Typical reaction from IFAs, when talk about transparency of publishing charges, if you are concerned now wait till 2013 arrives when not Which magazine, but consumer blogs will report your charges… high-street banks will put up their charges on notice boards & yes a Menu structure is being planned by most. Read my lips chaps.. your party and charade of being “Independent” ” Acting in the Customer Interest (NOT)” is OVER! Do you see the writing on the wall.. your fees will evaporate before you can spell L-E-G-A-C-Y.

  40. If Witch knows as little about everything else as it does about the things about which I do know something, then it ain’t worth reading.

  41. The variance may be caused by the fact that for many firms they cannot afford the risk to advise a client on just a £10,000 ISA transfer which was the case put around.

    Remember it is not just the advice cost and covering the stages the FSA would require.

    It then also involves the disproportionate liability that then lies with the firm which can known in advance.

    So for that massive average of say £356 average quoted. The FSA would expect the following.
    Whilst the breakdown may look a bit extreme in hours it would be broadly appropriate as no method of simplified advice has been agreed by the FSA.
    – Know your client Fact Find ( 1-2 hours)
    – Tax wrapper confirmation still appropriate ( Analysis 1 hour)
    – RISK Profiler ( 30 mins to review)
    – Provide risk education to client ( 1 hour + report)
    – Discuss Risk further to check client understands, advisers understanding of clients risk tolerance. ( 1 hour)
    – Recommend Suitable Asset Allocation ( I hour )
    – Review Existing Funds ( 30 min per fund)
    – Recommend new Funds ( 30 mins per fund)
    Do a suitability report to confirm every step of the process and why ( 4 hours )
    – Provide a appropriate way to monitor , rebalance & review (30 mins) every 6 months assuming done electronically with really a need for face to face review every year. ( 2 hours)
    Then you only need to look at the back of the Daily Mail yesterday where you see the No Win – No Fee chasers already gunning to sue the IFA if any of these steps are missed or client is not 100% happy after the event.

    Lets just say this involved a total of 12 hours work that £29 per hour before allowing for costs associated with giving the service.

    WHICH need to really see that the adviser cannot get away with a couple of hours work on this. Advice and Implementation have been combined by our regulators which would basically exclude this kind of client getting advice in the real world or getting a shortened service if he/she did.

    Its a bit like saying you will pay the medical consultant for the time to tell you you need an operation , however expecting the operation to be free even though by carrying it out he then needs all the PI cover , hire the theatre, get the support staff etc. etc.

    Pays peanuts you gets monkeys!!!!
    Use WHICH guide to best ISA and go without advice if you want cheap. Obviously they have done all the FSA required training and are happy to take on the liability of things going wrong.

  42. The above comment is absolutely outrageous! – Anyone who spends 12 hours arranging a £10,000 ISA transfer is in my opinion a COMPLETE TURKEY!

  43. I once put an open letter on the internet complaining about a ‘Best Buy’ I bought that turned out to be a lemon.

    Witch set their lawyers on me, no sense
    of humour you see!

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