Attention has once again been focused on remuneration post-Retail Distribution Review in the past couple of weeks, following the release of two new surveys on the subject of fees. Neither painted a particularly positive picture for advisers.
The first, published by self-proclaimed consumer champion Which?, looked at the varying fees charged by intermediaries across the country to undertake a range of commonly-requested tasks. The second, published by research specialist CoreData, pertained to reveal what advisory clients will be prepared to pay when the industry becomes wholly fee-based from 2013.
For those that have been espousing the view that the move away from commission will irrevocably damage the sector, the publication of two complimentary and negative reports in such quick succession would have been seen as somewhat serendipitous.
The truth is that these self-serving so-called studies add nothing of any value to the debate over adviser fees and were not worth the effort to express the anger with which they were greeted.
Let’s start with the Which? research. The methodology involved 150 to 200 quotes being gathered for a range of requests ranging from transferring a £10,680 investment into a stocks and shares Isa, to setting up a life insurance policy for a 30-year old woman in good health earning £30,000 a year.
To publish weak evidence based on extremes and use it to suggest that advisers are ripping clients off is disingenuous and cynical
In each case the average fee was presented alongside the lowest and highest charges quoted. The inevitable findings were that – quelle surprise! – fees quoted varied across different advisers, with the authors expressing consternation at the scale of the disparity, which was as much as £2,450 in the case of a transfer of a single premium of £5,000 gross into a stakeholder pension.
The inexorable conclusion: advisers set their fees arbitrarily in an attempt to exploit ill-informed consumers and maximise their own profit margin. Indeed, Which? said that the research highlighted a need for advisers to clearly display standard fees for any work, presumably in an attempt to allow prospective clients to easily shop around and to preclude reckless profiteering on the part of intermediaries.
What was omitted from the report, however, was any detail on how the work was described to the unknowing participants. It may seem axiomatic to state that all advisers should charge a similar fee for transferring an investment into a stocks and shares Isa, but obviously the wrapper and underlying investments chosen make a substantial difference to the cost.
There was also no word as to whether the adviser would have to perform a review and recommend the investments; no clarification as to whether any quoted charge was a fixed fee, starting rate or maximum cost; nor any effort to define qualitatively why one adviser might have charged a different fee to another. Some have even suggested that these individuals may simply have not wanted the work.
To publish such weak evidence based on one example at the extreme of each price range and use it to strongly imply that intermediaries are ripping clients off is arguably little more than disingenuous and cynical. To then claim that this research proved a need for fees to be outlined up front – something you would never expect of a solicitor or any other ‘professional’ – is beyond ridiculous.
So, what of the CoreData study? This was a better effort from a methodological perspective, with 1,020 individuals that all currently use an adviser questioned on their understanding of how their advisers’ remuneration is provided and what they would expect to pay when the sector moves over to adviser charging after the Retail Distribution Review comes into force.
Amongst a range of findings, the headline result of this was that the average client expected to pay £38.90 an hour to use an adviser. The survey also found that the average client thought that they would be required to pay £155 for a full financial review, which they expected would last four hours.
Again, though, the research was entirely quantitative in nature and failed to explain some key points that would undoubtedly have affected the responses. So when clients were asked how much they would pay for an adviser, the nearly 38 per cent of those that said they believe their advice is currently ‘free’ were likely to be quoting what they would be prepared to pay on top of what they currently spend through their respective products.
Were these people to be told that their direct investment charges would drop and the fee for the advice that has hitherto been bundled within this levied separately, I wonder if the results would have been different. We may never know.
Frankly, until a research firm, consumer body or other organisation decides that it is in their interest to do a full qualitative study that provides its participants will full disclosure, in order to gather opinions that are actually worth the paper they would subsequently be collectively presented on, mis-information will continue to abound.
Published: 25 January 2012
By Ashley Wassall
http://www.ftadviser.com/2012/01/25/opinion/ashley-wassall/ashley-wassall-weak-surveys-add-nothing-to-fees-debate-AOl1RTdb9ImqDtCHBSrG7N/article-0.html unshaven girl взять займ на карту онлайнзайм под птс омскзайм на карту маэстро мгновенно