FCA details the prices charged by UK advice firms

Added 29th April 2016

UK financial advisers charge between 1% and 4.5% of investible assets for their initial financial planning advice to clients with up to £50,000 ($73,000, €64,000), a survey by the Financial Conduct Authority has found.

FCA details the prices charged by UK advice firms

The median charge for the initial advice was 3%, with the fee generally lower for higher levels of investible assets, the FCA said.

The 3% charge remained the median level for investible assets up to £100,000. The median charge then declined to 2% for investments between £250,000 and £500,000, and to 1% for investments above £1m.

The charging structure profile was part of a survey, released on Thursday, which the FCA carried out in November last year as part of its research for the Financial Advice Market Review (FAMR).

The regulator surveyed 233 firms active in providing financial advice on retail investment products, including financial advisers, networks, banks and life insurance companies.

Tiered structures

It also found around half of the respondents had tiered charging structures with different charges for different levels of investable assets. The majority of firms responding to the survey said they did not differentiate between new and existing customers in terms of charging for advice.

Crucially, the survey did not ask firms to provide data on charges that customers actually have paid for advice.

Fixed charges

When it came to fixed fees, the FCA said the median initial fixed fee for advice on investments up to £10,000 was just under £700.

The median initial fixed fee for advice on larger investments of £30,000 or more was £1,000. Most of the firms in its sample had relatively similar initial fixed fees for investments up to £50,000, but the spread of these charges across firms increased with investable assets.

"Firms’ responses indicated that initial hourly charges for investment advice were broadly independent of investable assets," the FCA said.

Across all the levels of investable assets, the median hourly charge for initial advice on investments was £180 per hour, and, in terms of the spread, the ‘middle’ 90% of firms in its survey sample charged between £100 and £300 per hour.

Retirement prices

When it came to providing financial advice to retirees, the FCA found that charges by financial advisers were broadly similar to those imposed for investment advice

So the median initial percentage fees for advice on retirement income was 3% for pension pots up to £100,000, 2% for £250,000 pots, 1.5% for £500,000 pots, and 1% for pots over £1,000,000.

In terms of fixed fees, the median initial charge for retirement income advice were £750 for pot sizes of up to £10,000, £960 for a £30,000 pot, and £1,000 for pots worth £50,000 or more.

The hourly charges for the ‘middle’ 90% of firms in its sample were between £100 and £300 per hour, with a median (across pot sizes) of £185 per hour.

The median percentage fee for ongoing advice on retirement income was around 0.5% across all pot sizes though there was a variation of these charges across firms, with the ‘middle’ 90% of firms charging between 0.3% and 1%.

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About Author

Richard Hubbard

Group Editor

Richard Hubbard is the group editor at Last Word. He is responsible for the editorial content of International Adviser, Portfolio Adviser, Expert Investor and Fund Selector Asia. Richard previously worked for Thomson Reuters and has covered the financial services industry and investment themes from its offices in London, Singapore, Hong Kong and New York. Richard started his career at the Australian Financial Review in Sydney.

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