Your portfolio
Ensure you aren’t
overpaying for
advice
• The FCA says you
should be given the
option of paying for
advice via a one-off
fee, or an agreed
regular fee if the
advice is ongoing
• You do not have
to use an ongoing
service if it is offered,
but if you do you
should ask the adviser
what work they will
carry out for the fee
you are paying
• If you are already
using an adviser, ask
them to tell you what
fees you have been
paying, in pounds and
pence, rather than just
as a percentage. If you
are about to start using
one, ask for future fees
to be broken down in
the same way
• Work out if it is
cheaper – yet still
practical – to pay for
advice on an ad hoc
rather than ongoing
basis
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[ ADVICE ]
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for a changing market environment.
So is there a danger that someone who
receives a one-off piece of financial
advice may believe they have “all
the answers”, then fail to adjust their
portfolio for differing conditions?
Aldridge says this problem applies
regardless of how the fee is charged.
She says it comes down to how
financial planners define their role.
“[This] implies that the only thing a
client might need to have ‘answers’
about is investments and that in order
for them to be managed properly they
should be tinkered with,” she adds.
“That’s what most financial advisers
‘sell’ as their service but it’s often
not what’s really needed. Adapting
to changes of lifestyle is most often
about minimising tax, updating a
savings or drawdown strategy and so
on. Most robust portfolios don’t need
to be changed from year to year.”
“Where flat fees work best
is where there’s a set one-
off piece of advice such as
inheritance tax planning,
taking pension benefits,
or an investment portfolio
review”
such as inheritance tax planning,
taking pension benefits, or it could
simply be an investment portfolio
review. There, the client will have a
good understanding of the amount of
work they want and the adviser will
have a good understanding of how
long that’s likely to take them to do.”
Where it becomes more of a
challenge is where there is an ongoing
service and the adviser doesn’t know
how much interaction the client is
going to want.
“On that basis, it’s difficult to set
a fixed fee,” he adds. “If you were
Not that simple
doing that and didn’t want to use a
However, Chase de Vere’s head of
percentage fee, the only logical way to
communications Patrick Connolly says do it is on an hourly basis.
it is not as simple as one method of
“Most ongoing clients prefer
charging being better than another. His percentage-based fees as they feel
company offers clients three options: a more comfortable with a portion
percentage-based fee, an hourly rate or coming out of their portfolio rather
a flat fee, which will be agreed upon at than having to write cheques.
the first meeting.
Although for those with larger
“Where flat fees work best is where
portfolios, it will undoubtedly be
there’s a set one-off piece of advice
more expensive.”
trustnet.com