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Am I paying too much in fees to my financial adviser?

13 September 2021

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Question by Ed

I have a financial advisor and in the past I’ve been pretty happy with them. Since the pandemic less so. I feel like I’m paying a lot in fees - don’t know if I am or not - and not seeing much for these fees.


Answered by James Greenly

Hi Ed

That is a shame that you are not feeling as happy as you once were.

I am presuming that if the pandemic is one of the reasons, this is due to poor investment returns last year? Perhaps your adviser has not been proactive in communicating with you to reassure you during these stressful times? Either way, I suggest the best course of action would be to first of all get in touch with your adviser and be honest about the way you're feeling. I'm sure they would welcome the opportunity to right any wrongs and get the relationship back on track.

In terms of fees, I could not comment without knowing how much you're paying and what you are getting in return. You can compare what you are paying with what the regulator (the FCA) states is the average across the UK. In December 2020 they published some research into the state of the financial advice market in this country, and part of that research stated average financial adviser fees in the UK are 0.8% a year. On top of this, once you add in custody and fund charges, the average UK investor is paying 1.9% a year. You can read these numbers yourself on page 19 of this document: https://www.fca.org.uk/publication/corporate/evaluation-of-the-impact-of-the-rdr-and-famr.pdf

In summary, I would reach out to your adviser and let them know how you are feeling about the relationship. Be honest and open with them. Ask them to explain their fees in detail (including the total costs of the investment) - and you can then compare against the average. Ask what you are receiving for the fee.

For 0.8% a year (the average), I would expect a decent adviser to:

1) Offer you a face to face meeting annually to do a thorough review of your financial and personal circumstances
2) Make sure you're being tax efficient with things such as ISAs, pensions and tax
3) Review your investment portfolio, and make and fund switches or rebalance as necessary
4) Check you're on track to meet your agreed goals and objectives
5) Build and/or review your lifetime cashflow model

I hope that helps - and good luck speaking to your adviser. If you still feel as though you're not happy, you can reach out to any of the advisers listed on the Boring Money adviser directory.

Best wishes

James

Answered by

James Greenly

Chartered Financial Planner

I am a Chartered Financial Planner at Capital Asset Management, a boutique financial planning and wealth management firm based in the City of London.