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Consumers searching online for a fee-charging adviser may miss out as just 2.3% of IFAs advertise themselves as fee-based on their own websites, according to research.
Only 230 independent financial adviser (IFA) firms are actively describing their service as fee-based, out of a total of about 10,000 firms in UK, according to VouchedFor.co.uk.
VouchedFor.co.uk built an algorithm to search the web to identify IFA websites and work out whether they were describing themselves as either fee-based or fee-only, before manually reviewing their results.
Adam Price, founder of VouchedFor.co.uk, said the lack of explicit labels and key words to show how an IFA gets paid makes it hard for consumers to choose a fee-based adviser.
"In the run-up to RDR, more and more consumers will be searching for a fee-based IFA," he said.
"Consumers will begin to understand commission is rightly being outlawed under RDR, and will instead begin turning to those IFAs who have made the move to fee-based advice ahead of the RDR deadline.
"However, today very few IFA directories make it easy to find fee-based IFAs, and relatively few IFAs appear to be actively encouraging this option over commission."
Price said the "controversy and confusion" surrounding RDR had detracted from the public being educated on the benefits of paying for advice by fee, rather than commission.
He said most large firms and bodies within the industry are not yet economically incentivised to promote fee-based IFAs over commission-based ones.
VouchedFor.co.uk allows advisers' clients to review and rate their service. Advisers must join the site, which is restricted to those offering a fee-based service.
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Dubious
It seems a load of poppycock to me. I don’t know how they conducted the research or how good their programme was, but I know that there are many more than they claim that charge fees. All the members if IFP for a start are either fee charging or fee based. As to the comment by the gentleman who earned £1,000 in commission for a couple of hours work. It’s all in the presentation. I will bet that if those clients were in front of me and I could show them the computations I give to my clients who buy life assurance of this magnitude, how much they save by paying a fee, they would no doubt rush headlong for their cheque book. I would contend that either you are treating your clients as fools or they actually are fools to willingly pay commission for large life contracts.
Posted by: Harry Katz
Plug?
Just a plug for his website, this is not news..... Thousands of IFA's offer both services and i would guess less than 3% of clients actually pay fees... My evidence is purely anecdotal of course, as i suspect is Adam Price's
Posted by: Carl Leonard
Fee based or CAR
How many fee based advisers are there on or off line ? Fee based means giving advice without ANY product being essentially involved. The client pays the adviser directly with no product provider involvement. whether or not the advice is followed is imaterial. Advising a client on how to invest £100,000 and taking 1% pa from the fund is CAR and not even remotely fee based. Far too many who claim to be fee based are simply misleading the public.
Posted by: John Blackmore
Cost of advice
I was going to reply to Harry's remarks but I don't think it's worth the time rather spend it on helping my clients that keep coming back and referring more.
Posted by: Steve S
The trouble with fees
I met with a gentleman yesterday who was looking for "fee based advice" on how much pension he could receive if he was going to retire now, next year or NRD. I reckon it was about 2 hours work and quoted him a fee of £200. He was gobsmacked. My next bit of advice was for him to go and see an IFA who was still working commission only. Whats your number Steve S?
Posted by: Rob
Its a long way down
Careful you Fee boys (especially Holier than thou Harry) as it is a long way down from your pedestals...........
Posted by: Eric Shun
Fee-based nonsense
How nonsensical to talk of charging a fee and rebating commission on life insurance thereby demonstrating that fee based advice is better and cheaper than commission. What is your fee? I will charge half your fee by accepting commission to that level and rebating the rest. Therefore commission based advice is cheaper!
Posted by: Ken Durkin
Not right
No Ken You are wrong. I suggest you actually crunch some real numbers. If you guys can’t work it out for yourselves I’m certainly not laying out on a plate for you. If I have a commercial advantage I’m sure as hell going to hang on to it.
Posted by: Harry Katz
to fee or not to fee
The FSA and RDR have no claim to be a legitimate interpretation of Professor Gower’s original review or his further review released shortly before his death. The financial services industry and the professional adviser class who should be serving the public have brought this disaster firmly down on their own heads; and the future only time will tell.
Posted by: Mervyn
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Fees?
I saw a client last week who had been referrred by his accountant to an IFA - the IFA wanted a £400 consultation fee. The client was not impressed and came to me - I spent couple of hours with them one evening and will earn in excess of £1,000 arranging their protection needs. I explained RDR to them and they stated they wouldn't pay fees but were happy with commission being earned on protection business. They were professional individuals. Advertising yourself as Fee only adviser will deter many clients - those you will get will be hard work and a drain on your resources.
Posted by: Steve S