Nearly half of advisers think clients are being overcharged, survey finds
Almost half of advisers think that some clients are overpaying for the value of service they receive, according to a survey conducted by SimplyBiz's New Model Business Academy (NMBA).
While 53% of the 139 advisers who took part in the survey thought clients were not paying too much, 47% said clients were being overcharged.
Those 47% said they were particularly concerns about high fees for outsourced work, and initial and ongoing service. Concerns were also raised that wealthier clients were being overcharged.
The Financial Conduct Authority recently raised concerns about investment advice charges as part of its review of the asset management market.
NMBA managing director Tom Hegarty (pictured) said the recent focus on charges from the regulator had prompted advisers to rethink charging structures.
'The regulator has never provided specific terms around adviser charging, which may explain why there is such a wide range of charging structures in our profession,' he said.
'Ahead of the retail distribution review, “three plus a half” emerged as a popular pricing standard, although this linear scale is often now seen as unfair, especially for those with larger ‘pots’, despite the argument that the adviser is taking on a higher risk.'
Hegarty said the focus meant advisers needed to ensure they designed charging structures with clients in mind.
'To avoid any further industry "finger-pointing", we recommend that all charging structures should be designed with the customers’ interests at its heart and that measures are put in place to minimise any potential conflicts of interest,' he said.