Which? has called for it to be mandatory for IFAs to display fees on their website, to ensure consumers know up front what services are likely to cost before they instruct an adviser. Unbiased.co.uk, the UK’s No.1 adviser search, has for the past three years performed an annual poll of its database of 15,000 financial advisers, and published regular up-to-date average costs for a wide range of advice scenarios, including pension and retirement advice.
The most recent Cost of Advice figures were published earlier this year, and can be found in the unbiased.co.uk Cost Of Advice guide. This guide is part of the website’s ongoing commitment to promoting professional advice as the best route for consumers who want control over their financial future.
Karen Barrett, chief executive of unbiased.co.uk, comments: ‘We’ve been banging this drum for several years and absolutely agree that people need to be aware of the costs of financial advice. What people then go on to discover is that the value of this advice is typically many times greater. We’ve been helping people to understand not just the costs but also the outcomes of financial advice, to enable them to make truly informed decisions. This is now more important than ever, with pension freedom meaning that many people approaching retirement may now want to reconsider their options.’
Typical adviser fees*
|
Advice scenario |
Median fee charged |
|
|
Investment |
Investment strategy for a £50,000 inheritance for a 50yr old seeking medium term growth |
£1,500 |
|
Retirement planning |
Advice on a £200 a month pension contribution |
£580 |
|
Advice on transferring a £30,000 pension with guaranteed annuity rates |
£900 |
|
|
Advice on transferring a £100,000 pension with guaranteed annuity rates |
£2,000 |
|
|
Specialist advice on defined benefit transfer |
£1,500 |
|
|
At retirement |
Converting a £30,000 pension fund into a lump sum and annuity |
£825 |
|
Converting a £100,000 pension fund into a lump sum and annuity |
£1,750 |
|
|
At retirement advice on £100,000 pension pot (client requires full advice) |
£2,000 |
|
|
At retirement advice on £200,000 pension pot (client requires full advice) |
£2,500 |
Karen Barrett continues: ‘It’s good to see this getting more attention, but it’s important that the focus is not just on costs, so I hope the regulator considers both sides of the equation. The nature of independent financial advice is that it is bespoke, so it is likely that for each person an adviser sees the situation and therefore the costs will differ. The figures in our annual report are averages, and this gives people a broad idea of what they can expect to pay in similar circumstances. We know from experience that the cost is one of the main barriers to seeking advice and feel that more transparency around these costs would be helpful to people researching their advice options.
‘Pension freedom has created many more options, but also many more risks for people. That in itself can make financial advice invaluable, by helping people make confident decisions and to avoid mistakes that could damage their incomes in retirement. Meanwhile our figures demonstrate that financial advice, at its best, has the potential to enhance retirement income to a remarkable degree.’
TheValue of Advice**:
|
|
Start at age 35 |
Start at age 25 |
|
Cost of advice on a £200/month pension contribution |
£580 |
£580 |
|
Boost to retirement savings |
extra £25,730 in pension pot (excl. tax relief and interest) |
extra £34,300 in pension pot (excl. tax relief and interest) |
|
Return on the initial cost of advice |
4,336% |
5,813% |
To search for a whole-of-market financial adviser, visit www.unbiased.co.uk
ENDS
Notes to editors:
The Cost of Advice guide with typical costs for common advice scenarios can be viewed at www.unbiased.co.uk/cost-of-advice
*Unbiased.co.uk research carried out in July 2015 (230 advisers)
**The unbiased Value of Advice report found that those who had taken advice when planning their retirement had on average £48,279 more in their pension pot (after tax relief and interest) compared to those in a similar income bracket who did not take advice. The table included above is an illustration of the long-term benefits of taking retirement advice early, this time excluding tax relief and interest.
For more information contact:
Anna Schirmer/ Sarah Tye/Calum MacDougall, Lansons: 020 7294 3682
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