Quality, independent advice at a fair price
If you are like me, or like many of my clients the first time they approached me, you will be nervous about how much it is going to cost to get advice. You want good advice, but you don't want it to be so expensive that it wipes out all the benefit.
In my opinion, many advisers charge too much, with high commissions or fees, then don't provide the service that the costs merit. I suspect that many advisers try to avoid the subject of "paying for advice" altogether, but I am happy to be completely open and frank with my clients about how much my services will cost and I will discuss and agree them up-front, wherever possible.
If you don't feel that you can afford paying an up-front fee, it is sometimes possible, depending on the situation, for me to receive a commission from an insurance company instead. The result is that the charges on your contract will be higher, so you would not necessarily be better off in the long term and you might be worse off, but it allows you to avoid having to make the initial outlay. Please discuss the options with me if you are unsure.
Initial and ongoing fees on investments and pensions
Many advisers take all their fees up-front, so it is little wonder that they give no ongoing service! I usually charge a more modest initial fee and have an annual payment too (the annual payment is automatically deducted from the value of the investments, so you don't have to write a cheque), so that I am properly incentivised to look after my client's pensions, or investments year after year.
Some transactions, however, only require initial advice, e.g. a mortgage, or an annuity. These services only require an initial fee.
The next section gives you examples, but it is difficult to be precise about what my costs would be, as all my fees are agreed on a case-by-case basis, according to the complexity and the workload involved. However, I can assure you that my costs are very competitive, especially given the quality of the advice and service I give.
Examples of work that I have done and what I have charged
1. An example of when a fee might be modest
A husband and wife with a successful business came to me to set up pensions. They knew that they wanted pensions, so that meant that all I needed to do was select the best provider for them, help them decide how much risk to take and invest their money in the most suitable funds. The clients wanted ongoing advice and they are keen to make substantial payments every year, at least while their profits are at their current high level. I agreed an initial fee of £500, i.e. £250 for his policy and £250 for hers. This was paid as a deduction from their pension premium, which meant that they got tax relief on my payment! I also agreed with them that I would get 0.5% of the value of the pension every year to pay for my ongoing monitoring and reviews. This is again paid out of the pension scheme as an additional charge, so the clients don't ever have to write me a cheque.
2. An example of a more complex and more expensive inquiry
A hugely successful firm wanted me to invest substantial amounts of money to dovetail with their cash flow planning and their retirement strategies. The initial work was highly complex, involving a thorough analysis of the tax issues, strategies to move money from the company to the directors as quickly and tax-efficiently as possible, plus advising on the most suitable remuneration strategies and the various products that would best suit the clients' circumstances. The initial fee for this work was just under £5,000, but this is less than 0.5% of the amount invested and the benefits of this advice are already plain to see.
3. An example of how paying a fee can save money
Some existing clients asked me to arrange a ten-year life assurance policy. Had I set it up on a commission basis, the premiums would have been about £90 a month, out of which the insurance company would have paid me about £1,000. I agreed that I would simply charge the clients £400, paid as a cheque by them and take no commission, which meant that the insurance company could reduce the premium to only £78 a month. The clients will therefore be better off after about three years, and will save about £1,000 over the ten-year term, if they keep the plan until maturity.