Tag Archives: jean claude juncker

So What’s All This About Adviser Charging

29 Apr

Okay, I think it is important to talk about this. From the beginning or 2013, how advisers charge for the services provided has changed; and the service provided has now changed. There is now Independent or Restricted Advisers.

There has been so much focus on what is paid and the general terms are typically, either an hourly rate (average from what I can see around £175 per hour) or where investment advice takes place it’s typically 3% initial (based on the investment amount) and an ongoing servicing fee circa 1.0% (but some institutions will charge more and few less).

business man writing investment concept or investment plan on white board Stock Photo - 13224684

Personally, I believe the big issue is – a fair price is charged for the work done or being done –  what you receive for what you pay. Should Restricted Advice charge the same as Independent Advice? The answer to this is in the detail – so what is the difference?

What is Independent Advice?

The rules set out a new definition for independent advice, which is unbiased and unrestricted, and based on a comprehensive and fair analysis of the relevant market. This is designed to reflect the idea of genuinely independent advice being free from any restrictions that could affect their ability to recommend whatever is best for the customer. To reflect the range of products that a consumer would expect an independent firm to have knowledge of, and in line with work the European Commission has undertaken.

What is Restricted Advice?

This advice that is not independent and will need to be labelled as restricted advice; for example, advice on a limited range of products or providers.

Where a firm providing restricted advice chooses to limit their product range to certain range of investments or providers, there will be clients for whom this is not suitable. It is not acceptable for a firm to make a recommendation for a product that most closely matches the needs of the consumer, from the restricted range of products they offer when that product is not suitable.

I am an Independent Financial Adviser and have specialised in investments and tax planning with the focus on a high level of service, expertise and support. My view on the argument between the different advice type is simple but then again I am very technically focused targeting tax mitigation and investment returns, profitability and success.

My question to you is should you, as the consumer, pay the same for a Restricted Service as for an Independent Service? 

The first point is be aware of the service being provided – make sure if you are paying for the service being provided and in my opinion that should be a fully comprehensive service. Restricted advice is simply that “Restricted” and Independent is “Independent”. An IFA – Independent needs to take into consideration all available contracts, both packaged and unpackaged, available in the UK Markets – assess, consider, review and recommend from every available structure; whereas a Restricted Adviser will sell you a contract from their permitted range.

Clearly, the time and effort and expertise required under both designations should carry a cost reflective to the service provided. I personally believe that the charge for Restricted Advise should be the less expensive option. It seems that many institutions are not differentiating – I assume they are hoping/expecting the consumer not to notice the difference.

Perhaps also worryingly, a number of institutions and banks have declined to disclose their adviser charges with some saying they would not make their limits public (as reported by Citywire, Investment Adviser, Money Marketing, The Telegraph, Financial Times, amongst others).

Of those who have disclosed mandated adviser charges, there is a typical initial charge of around 3% with ongoing charges ranging up to 3% per annum.

I did think of putting together a list of the institutions and the fees paid but felt that this is not constructive. I believe it is wiser to weigh up the pros and cons of what is being offered and the price you are being asked to pay.

Remember, now you agree to a contractual fee arrangement and as with all contracts the terms are binding both ways. If you are paying for annual reviews, on-going investment advice, portfolio stress-testing and your adviser is remunerated relative to their level of success….make sure you get what you pay for. I know my clients do…and it creates very close and personal relationships where my financial interest and their financial success are aligned i.e. I need my clients to be successful and see positive returns on their investments.

All I suggest is take care and consider your options – what you receive for what you pay.

Greece and The Greek Debt Crisis

10 Feb

I am a fee charging financial adviser (but the commission option is available) at Jewell & Petersen Ltd based in Cardiff, South Glamorgan. Follow me on Twitter and LinkedIn.

Greece’s deadline of Monday 6th February 11am came and went, the requirement  was to have sorted out its agreement with private bondholders. In the agreement had to be a new set of austerity measures in order to trigger the release of the next phase of bailout funds. Given the progress of EU politics, this ‘deadline’ passed by and Greece hasn’t defaulted  as yet, markets haven’t collapsed and world events continue.

Monday’s deadline’ passed with the usual posturing by leaders from Germany and France. The gist from both were broadly the same as spoken last time. The negotiators from the Greek government and its creditors  let a deadline pass.

There is, however, a real deadline looming. On 20th March 2012, Greece has to repay a large chunk of debt to those holders of its sovereign debt. It cannot pay this debt off without the next tranche of bailout money from the European Union and IMF.

The European Union is looking for Greece to enact several severe budgetary cuts. This is to show it’s intent about getting the framework, structure and plan for its finance in place to achive a resolution to its debt crisis. Greek politicians are nervous about agreeing to policies that they fear won’t work and could ignite social tensions. Some of these tensions have overflowed in recent days.

European Union leaders are becoming more impatient with Greece. Although, it’s not a one-sided debate where Germany and France can pressurise Greece into action. Consider this statement made by the leader of the Eurogroup leader and Luxembourg Prime Minister Jean-Claude Juncker:

“If we force them out or push them so much that they resign, we would still be forced to support Greece and would today have to invest unimaginable sums. That would be at least as expensive as the now virtual costs of the aid credits up to now.”

The Greek government knows that the European Union would have no choice but to pay for a huge bill if it forces Greece out of the Euro. This situation is expected to continue until both sides are satisfied.

“Time is running out,” says Chancellor Merkel. This may be true but the real deadline that matters to investors is 20th March, where despite all posturing debt will have to be repaid and the money must be available to meet that payment.