A Liberal Democrat Member of the European Parliament, Sharon Bowles MEP, has been reported as planning a “crackdown” on excessive adviser charging.
Apparently she is calling for all adviser charges to be expressed as an hourly rate rather an a percentage.
The majority of advisers cost their services as a percentage of the monies that a client has to invest. This approach has both advantages and disadvantages.
For example someone with a modest amount of money to invest who can find an independent financial adviser to act for them may well find this approach is financially advantageous.
On the other hand someone with a significant sum to invest may find the cost in monetary terms is very high indeed.
We believe that what is more important than the way in which charges are applied is that they are transparent.
It is for that reason that when we deliver advice we quote a fixed project fee.
We believe that this is better than an hourly rate because it means we have to have the discipline of getting the job done in a timely fashion. Our clients prefer this approach as they know the cost will not exceed that which we quote.
But Ms Bowles like many politicians misses the point.
What matters is not the methodology behind the cost of advice but that advice represents great value for money.
It also is worth noting that advice does not have to result in product it may simply be that the value an adviser can bring to a client is about planning, answering questions, challenging thinking and helping an individual to keep on track towards achieving their financial goals and objectives.
Photo credit: Flickr/waving cat
