Advisers still testing post-RDR market
MyTouchstone’s analysis found that advisers are adopting different fee-charging models for different clients.
Instead of simply adopting an hourly or fixed-rate fee for all their clients the research shows distinct trends in the approach they are taking to adviser charging.
Charging clients a percentage of the amount to be invested is currently the most popular fee model being adopted by advisers with 83% of those who have provided data to MyTouchstone using this approach for some of their clients.
However the research also showed that nearly half (46%) of advisers are choosing to charge some clients an hourly rate whilst almost a third (29%) charge a proportion of their clients a fixed one-off fee. Only one in ten charges a retainer with some of their clients.
For those advisers who charge a percentage of the initial investment as their fee the average rate is 2.67%. For advisers charging by the hour the average rate is £164.92.
Peter Welch, intermediary director of MyTouchstone, said: “One of the challenges for advisers in the post-RDR market is to be able to present their fees in a way that clients will perceive as transparent and affordable.
“The insight this research provides suggests that in fact the majority of advisers are taking their fee as a percentage of the client’s investment rather than as a fixed one-off fee.
“Obviously the charge will be transparent to the client but by deducting it from the total investment being made rather than as an additional fee, advisers may feel this is more likely to be accepted by their clients.
“This new insight demonstrates how advisers have adapted to the new regulatory framework whilst limiting disruption to their business models and the way clients have previously been accustomed to working with them.”
The MyTouchstone database enables intermediaries to collaborate and share, on an anonymous basis, their preferred fee models and the level of fee charged.
Welch concluded: “Overall, the fee models identified in our new analysis demonstrate how the intermediary market has adapted to the implementation of RDR.
“Over the coming months it will be interesting to see how the market evolves as clients and intermediaries alike become accustomed to the adviser-charging world.
“We will be monitoring this closely and reporting back to advisers using MyTouchstone, allowing them to benchmark their fees and model against the market as a whole.”