The IFA and wealth manager also says that its recent research found that investors do not understand how much they are paying for advice and what they should receive in return.
The Wales-based firm carried out a survey of 1,000 UK investors with portfolios ranging from £52,000 to £1m in June.
According to the firm, the results of its survey reveal that most investors pay more than they need to for advice and do not understand what they should get in return.
The survey found:
- Only 12% of investors think that percentage-based fees are the fairest way to charge for advice, while 42% think fixed fees are the best way to pay
- 39% do not know how much they are paying for financial advice
- 27% say it is too difficult to separate advice, platform and fund fees
- 53% have not met their adviser face-to-face for two years or more
Bancroft Wealth charges a £500 a year flat-fee for wealth management.
Bancroft says one of the often-promoted benefits of seeing advisers who charge a percentage-fee is the annual face-to-face meeting but most investors who pay for ongoing advice (53%) say they have not seen their adviser face-to-face for two years or more.
Keir Ashman, pensions and investments specialist at Bancroft Wealth, said, “On average, those investors who took part in our survey were paying £2,835 in fees to their adviser a year, with the highest paying £7,500. We’ve even come across clients in the past paying over £30,000 a year.
“So, it’s hardly surprising that only one in 10 investors think that percentage-based fees are the fairest way to pay for advice. In contrast, 41% said that a fixed fee would be the fairest way for financial advisers to charge for their services.
“In my experience everybody who receives financial advice benefits from it, but the problem with paying for advice as a percentage of investable assets is that it can become hugely expensive - particularly for those with larger portfolios.”
He believes percentage fees often “intentionally” lack transparency.
“If we (advisers and wealth managers) are to ensure that those who receive advice are treated fairly and build trust in the industry, we need to work together to improve the image of financial advice. And that will only be possible through how we act, not merely by what we say.”
• The survey of 1,000 UK adults with more than £50,000 in investments was carried out by OnePoll for Bancroft between 3 and 11 June.