15 November 2016
Many articles have been written about financial advice charges.
Unfortunately some of these seem to focus only on the actual advice
charges themselves and not on any additional charges or on what
people actually get for their money.
Looking at some of the detail in these articles I'm also not
sure that all firms provide accurate information. We do a fair bit
of competitor analysis and so I have a good understanding of what
other firms do and how much they charge; this isn't always
reflected clearly in the articles I've read.
Advice charges are important and should be a key factor for many
people in deciding which adviser they want to work with. However,
they should not be looked at in isolation.
The starting point is to recognise that financial advice isn't a
commoditised service. There can be major differences between the
advice and service offered by different firms. Here are some key
differences you need to consider:
1. Independent versus restricted advice
It is important that you know whether your adviser provides
independent or restricted financial advice. This can impact on the
scope of advice they give and on the actual advice itself.
An independent financial adviser can provide advice across all
financial planning areas and recommend all retail investment
products from all providers across the market.
Restricted advisers, as the name suggests, are restricted in
what they can recommend. They either limit the areas in which they
provide advice and/or they only recommend products from a limited
range of providers or might just sell their own products.
Most of the larger advice firms give restricted rather than
independent financial advice.
Chase de Vere believes that independent financial advice is the
gold standard. We believe that getting independent financial advice
will ensure that the recommendations people receive are completely
unbiased, unrestricted and in their best interests.
You would expect to pay more for independent rather than
restricted financial advice, although often this isn't the
Chase de Vere only gives independent financial advice.
2. Adviser or product provider
You should understand whether your adviser is likely to
recommend their own financial products or instead research the
market and select the best products available.
Many well known restricted advice firms such as St James's
Place, Hargreaves Lansdown, Tilney Bestinvest and Towry sell their
own products, investment funds or platforms. Some companies will
sell only their own products while others will sell their own
products alongside those from other providers.
If you are using an adviser which sells its own products,
investment funds or platforms you need to be aware that they will
be earning more money by selling these rather than by recommending
third party products. In this situation any financial advice fees
you pay will only be a part of the overall charge they will
You could therefore conceivably pay what looks like a lower
financial advice fee, but then end up with higher product, fund and
platform charges, meaning that overall you're not getting a good
deal. Some of the most expensive products, investment funds and
platforms on the market are sold by restricted advisers.
Chase de Vere doesn't have its own financial products,
investment funds or platforms. This means we select the products we
believe are the best value on the market for our clients.
3. Advice delivery
There are different ways in which financial advice can be
Traditionally financial advice was given face-to-face by a
qualified and regulated financial adviser. Many advisers, including
Chase de Vere, still give advice in this way today.
However, there are also an increasing number of firms which give
advice by telephone, email or solely online. These models can be
cheaper than face-to-face advice as there are lower costs involved
in running centralised advice services and this could be reflected
in lower charges for customers..
The right approach for you will depend on your own personal
4. Ongoing service
For many people this is very important. Financial advice isn't
usually just about 'fixing' your finances, but rather it is about
making sure they're set up in the best way to meet your personal
and financial objectives and then to monitor this on an ongoing
basis to ensure everything remains on track.
Different advice firms can provide different levels of ongoing
service. Some, such as Chase de Vere, will arrange regular
face-to-face meetings with an adviser where progress is discussed
and any further actions are agreed.
Other advice firms might offer more remote servicing or in some
cases there is no ongoing service provided at all.
In terms of charges you can expect to pay more if you want a
personalised service where your adviser is looking after you on an
ongoing basis. You should be able to find lower ongoing charges if
you want a more remote or more basic service or if you don't want
any ongoing service at all.
5. Percentage or time-based fees
Most adviser firms charge percentage fees. This is where their
charges are worked out as a percentage of your investment and/or
A 1 per cent per annum percentage fee isn't uncommon and this is
what Chase de Vere charges. If a firm appears to be charging less
then it is possible that they aren't giving face-to-face advice or
they are giving restricted advice and so perhaps are also earning
money from selling their own products, funds or platforms.
If your investment assets increase in value then the overall
adviser charges will also increase. Similarly if your assets fall
then the adviser charge will fall.
The alternative is to pay time-based fees. These are usually
worked out with an estimate of how much time will be required to
provide you with the advice, related administrative work and
Chase de Vere also offers the option of paying time-based fees.
The amount you pay depends on your circumstances and objectives. We
charge £250 per hour for independent financial advisers and £80 per
hour for administrators. So your overall charge would depend on how
much time of each would be required, with your average hourly
charge somewhere between the two.
Chase de Vere advisers discuss the percentage and hourly fee
charging options with their clients and between them agree the best
approach to take.
You need to understand how much your adviser charges and how you
will pay these charges.
However, this alone isn't enough for you to pick the best
adviser for you. You wouldn't buy any other non-commoditised
product or service by simply just picking the cheapest one.
You also need know to whether the adviser offers independent or
restricted advice, whether they sell their own products, what
services they offer and how these services are delivered. With this
information you will be in a much better position to make an
informed decision about what is right for you.