What’s good advice worth to you?
By Teamspirit on Tuesday, 25 April 2017
In their yearly update, published this month, the Financial Conduct Authority has warned that there is still a lack of clarity around the costs of financial advice.
The FCA is concerned that some companies are not being as transparent as they could be with how they charge for advice, and that this could have a detrimental effect on the industry as a whole.
The average cost of financial advice is £184.58 an hour in the UK, but the amount individual companies can charge – and what they charge for – can vary greatly.
Many advisers have embraced the move from commission-based pricing to flat fees, and use their fee levels as a selling point. But some companies have been found to charge additional fees and restrictions that cover a range of actions, from day-to-day management to switching funds and moving money between firms, which may not be apparent to ordinary savers.
With larger advice providers increasingly targeting higher value clients who are more willing to pay the additional costs, it seems that it is being left to the fintechs to cater for the more general consumer.
From Nutmeg to eVestor, the latest entrant to the market, a growing number of companies are offering simple, decision tree-based robo-advice to customers who may need some guidance about what to do with their money but don’t necessarily need the bespoke service offered by the more established players.
It will be interesting to see if the FCA encourages both sides to work towards offering services for everyone, or if this will help crystallise the divide between high-value and mass-market services.