In this transitory environment, the arguments for selecting a fee-based adviser who has already embraced RDR are more compelling than ever.
London, UK (PRWEB UK) 8 September 2011
The VouchedFor.co.uk "Fee-Based Advice: Beyond The Tipping Point?" report reveals investors could be £4200 better off with a financial adviser who is fee-based rather than commission-based.
The report found 55 fee-based Independent Financial Advisers (IFA) now publish their fees online. On average, they charge £143 per hour, or 1.8% of assets upfront followed by 0.7% p.a. thereafter for as long as the client retains their services. They refund all commissions, typically 3% upfront and 0.5% p.a. thereafter. A client investing £100k over 6 years, who seeks only basic one-off advice, can receive £4200 commission back (net of fees) with a fee-based adviser, which would otherwise have been pocketed by a commission-based adviser.
In reality, fee-based advisers are committed to delivering high quality ongoing advice, selecting the very best products, meaning this benefit will often be best captured through better advice and outcomes, rather than commission refunds. Around 25% fee-based IFAs charge an average £1338 for a financial plan, pointing to an even higher quality of advice.
From 2013, the Retail Distribution Review will ban sales commission due to the bias it creates. Instead all financial advisers will agree fees directly with their clients. However, the FSA has warned advisers may mis-sell in order to maximise commission while they can. 18% of IFAs are expected to leave the industry in 2013, and a further 66% remain predominantly commission-based. Already, mis-selling costs investors £400-600m p.a.
The report found it can be difficult for consumers to find a fee-based adviser. Today only 230 IFA firms (around 3% of the total) advertise a fee-based option on their website, and many online IFA directories are unable to verify an IFA's charging structure.
Adam Price, Founder at VouchedFor.co.uk comments,
“While some advisers have embraced RDR early on, making their charges more transparent and enhancing their proposition, many are either yet to make the transition, or are resigned to leaving the industry.”
“In this transitory environment, the arguments for selecting a fee-based adviser who has already embraced RDR are more compelling than ever.”
“By issuing this report we hope to re-energise the debate, and encourage the dissemination of practical and current advice to consumers seeking an adviser they can trust.”
VouchedFor.co.uk lets consumers choose from among the best Independent Financial Advisers (IFA) in the UK, and then provide feedback on their experience. It targets the most RDR-ready IFAs, featuring only IFAs who prefer to work on a fee basis, and making it very clear where an IFA holds a qualification on the FSA’s “Level 4” list. It also checks all IFAs are authorised by the FSA (or FSA-regulated firm) to offer independent “whole of market” advice across all regulated saving and investment products. VouchedFor.co.uk is entirely independent and reviews come entirely from IFAs’ clients.
VouchedFor.co.uk was founded in 2010 (launching May 2011) by Adam Price, simply because he felt there was no large business or website in the UK that he felt comfortable referring his friends and family to when they needed a financial adviser.