The fee bit...
Between 2015 and 2017, Gould Financial Planning moved from hourly charging to individually quoted fixed fees. These are based on funds under advice, meeting frequency, and adviser time.
‘Clients said they prefer knowing in advance and not feeling they are “on the clock”,’ says Redman.
Regarding this year’s new product intervention and product governance sourcebook (Prod) rules, he says: ‘The fee calculation is a function of the client-specific service level. We have been offering a Prod-based, client-focused service proposition for years.’
The firm’s fees for private clients comprise five segments.
‘E clients’ typically receive one meeting every two to three years and a single multi-index fund. They pay fixed annual fees that, for a typical client with £100,000, would be between £650 and £1,000.
‘D clients’ receive one annual review plus a simplified model portfolio. For a typical D client with £200,000, charges are between £1,300 and £1,800.
‘C clients’ have a fully bespoke portfolio. Ongoing fees for a typical client with £600,000 would be £3,000 to £4,500.
‘B clients’ usually have £1 million to £2 million. In addition to annual reviews, they receive an interim statement. Charges for a client with £1 million would be £4,000 to £6,000.
‘A clients’ typically have over £2 million and receive two full meetings a year. For a client with £2 million, the charge would be between £5,000 and £8,000.
Clients receive full access to the team, technical bulletins, economic commentaries, an information pack to help clients with tax returns and a pack for wills where relevant. Next year, they will also have access to a portal through Intelligent Office.
For a typical new client with around £600,000, initial fees are fixed, usually between £5,000 and £8,000 (0.83% to 1.33%), depending on complexity. For a £100,000 fund, initial fees are £1,500 (1.5%).
The firm aims to keep total costs, including adviser, fund and platform charges under 1.5%, but Redman says Mifid II has made this target harder to achieve.
‘We arrived at the 1.5% all-in charge pre-Mifid II,’ he says. ‘The only charges historically not communicated to clients were transaction costs in each fund. Under Mifid II, these costs need to be detailed to clients. So, post-Mifid II, the target is still 1.5%. But it is a challenge.’
Redman says he prefers fixed fees to percentages because it is harder to prove the firm is adding value with the latter, especially for a large fund requiring relatively straightforward advice.