I hadn’t realised until I actually met with this couple, but they were seeing five, yes that’s five, different companies, before deciding how to proceed. We provided a quote for what we call The Life Roadmap Report, their financial plan. They later asked that if as part of that process we implemented a certain product, investment of £500,000 to an investment written in trust, what would the fee be and what would our ongoing fees be?
During our conversations that have followed, the client has been very happy to share what he’s found out. So, five different companies, five different charging structures:
• Company 1 – no planning fees, an implementation fee of £20,000 and ongoing fees of 1%
• Company 2 – planning fees apply, but are then offset against implementation fees of £20,000. Ongoing fees of 1% apply.
• Company 3 – client didn’t disclose exact fees, but confirmed they were lower, but that he very much felt this would be an “off the shelf” solution with little personalised advice
• Company 4 – lower planning fees, mid-range on implementation fees and similar ongoing charges to companies 1, 2 and 3
• Company 5 (that’s us) – much higher planning fees (approximately £7,000), much lower implementation fees (approximately £1,470) and very competitive ongoing charges (I’d offered a reduced service based on planning only, with client happy to run their own portfolio)
Company 2 were even able to provide definitive ongoing charges to the client, including product and investment charges. They have clearly selected the product before the client has even completed a factfind, let alone the planning and then research process!!
Our fees are very much oriented towards the planning end. There’s no doubt this is where the time and effort is spent and it’s where the value is. The clients gain absolute clarity on their financial position, what needs to happen and why they are taking the actions they are taking. Without this process, how do we even know that the investment he’d asked us to quote for is the right thing to do?
However, when you look at the planning fee in isolation, there’s no doubt we were by far the most expensive at this stage, with one firm not charging at all. But, without a plan, and not wanting to quote for specific products that may, or may not, form part of the future plan, I don’t like quoting implementation fees until I and the client are clear what this final plan looks like. But, based on this experience, I think I’m going to have to start thinking about it. That’s the point at which we suddenly start to look very good value when compared with others.
Nicola Watts APFS Chartered Financial Planner, Chartered Wealth Manager, CFPTM Chartered FSCI - director of Jane Smith Financial Planning
After joining the family business in 2000, Nicola qualified to provide advice in 2001, and has been a director of the business since 2006. Since the retirement of her mother (Jane Smith), Nicola bears sole responsibility for the management of the firm, and the advice provided to clients. Nicola is married to David and has two young children, Emily and Olivia, and Poppy the black labrador.