Well-known consumer group Which? has published a report into the fees financial advisers charge, and has found huge variations in the cost of advice for “exactly the same service” and have called for much greater transparency in the fees charged.
We agree with this principle. In fact, we agree with a lot of the conclusions this article draws, in particular the eight questions they suggest you should ask a financial adviser (down at the bottom of the article).
We completely support the call for transparency, both in this article and by the Financial Services Authority. We are, and have been, an advocate for the Retail Distribution Review, due to come into effect in January 2013, which, inter alia, insists that financial advisers must agree with their clients how much they pay for advice.
Where we don’t agree with Which? is their call for a “rate guide” to be published on advisers’ websites. This implies that financial planning can be reduced to a series of financial transactions, whereas we believe that the arranging of any products recommended is the least important part of the process.
Financial planning is the most important part: the creation of a strategy and a road-map that will direct you to your long-term financial goals, over many years, and the oversight and coaching to make sure that it all happens for you.
Financial products are commodities; financial planning is a service. Commodities are bought on price; a service is bought on value.
Only when the service is explained and the prospective client understands the value of financial planning to their situation can a judgement be made on price.
It is (usually) cheaper to fly Ryanair, but I (and almost everybody I know) will fly with another airline, if possible. Why? Because they value the service that other, less commoditised, airlines provide.
“A cynic is a man who knows the price of everything and the value of nothing.” Oscar Wilde
David Crozier CFP