Flat, fixed, and ongoing: how 20 profile stars charge

From contingent charging on DB transfers to a suitability review, the FCA has made clear it's looking at advice charges. In this comparative piece, we look at the fee structures of 20 cover stars.

Name(s): Stuart Cardozo and Shane Gorman 

Firm: SWC Independent

Location: Edinburgh

Fee structure:

SWC has two service levels, having removed its lowest (telephone and email-based) proposition this year. It has 50 clients on its standard service, which offers one face-to-face annual review at 0.65%, subject to a minimum £400 a year.

SWC has 33 clients on its full financial planning service, which includes pension planning, inheritance tax planning, and free mortgage advice. This is also 0.65% a year but with a minimum of £600.

'We moved initially from 0.5% to 0.65% because we want to provide access to affordable advice,' Cardozo says.

‘But the industry average is 0.75%, so we will move to that gradually. My ideal business model is 100 clients, all paying around £1,000. But we won’t switch away from percentage-based charging, because that [provides the most reliable income].’

Name(s): Stuart Cardozo and Shane Gorman 

Firm: SWC Independent

Location: Edinburgh

Fee structure:

SWC has two service levels, having removed its lowest (telephone and email-based) proposition this year. It has 50 clients on its standard service, which offers one face-to-face annual review at 0.65%, subject to a minimum £400 a year.

SWC has 33 clients on its full financial planning service, which includes pension planning, inheritance tax planning, and free mortgage advice. This is also 0.65% a year but with a minimum of £600.

'We moved initially from 0.5% to 0.65% because we want to provide access to affordable advice,' Cardozo says.

‘But the industry average is 0.75%, so we will move to that gradually. My ideal business model is 100 clients, all paying around £1,000. But we won’t switch away from percentage-based charging, because that [provides the most reliable income].’

Name(s): John Hamilton-Hunt

Firm: Punter Southall Financial Management (PSFM)

Location: London

Fee structure:

PSFM has developed two service levels over the past 18 months.

'We looked at our client bank and found some clients are happy with a fully bespoke service, while others prefer something more streamlined,' says Hamilton-Hunt.

'We have identified those clients and developed a simpler, "primary" service in addition to the existing bespoke one.'

The charges for bespoke or primary services are the same. Clients in both service levels receive at least one annual review or more if they need or request it. They also receive quarterly newsletters and other communications.

The bespoke service is with a dedicated adviser, but the primary is with a team. 'It could be a more junior adviser, depending on their needs,' says Hamilton-Hunt. 'It makes more use of digital communications and reviews are more likely to be over telephone and email.'

Initial advice fees are fixed depending on complexity, with a minimum of £1,500. Implementation is not offset and between 0.5% and 2%. Ongoing clients pay a 0.5% advice fee if they are invested with a DFM. A typical DFM’s charge would be 0.75%.

Those in advised investments pay 1% up to £500,000 and 0.75% thereafter if PSFM manages the asset allocation. Another option is to use multi-asset funds, for which those charges reduce by 0.25%.

The charges are calculated according to average case times, based on adviser fees of £150 to £250 per hour, paraplanners at £125, and administrators at £75.

Name(s): Sharon Sutton

Firm: Thornton Chartered Financial Planners

Location: Isle of Man

Fee structure: 

Thornton offers a free initial meeting for potential clients to establish whether they are a good fit. If they choose to proceed, they are quoted a fee for the second phase based on the work required, which would include a cashflow planning exercise. This starts from around £1,500.

The first meeting on financial goals is about tackling a key issue for clients: how much is enough?

‘We are really good at fact finding,’ says Sutton. ‘We go through some fairly in-depth questions about whether their money is giving them the right return on life for example.’

After completing a full analysis, Thornton provides a financial report. The cost of implementing any recommendations depends on the amount of work required and the level of investment responsibility the firm is taking on. Thornton tends to factor the cost of the planning exercise into the subsequent implementation fee. The firm would not disclose this because, Sutton says, it is bespoke to each client.

Implementation fees are not charged on a percentage of assets basis because, Sutton says, it is an administration function.

She believes the value is in the plan. To keep that on track, clients pay an ongoing advice fee of 0.75% if investments are being held on a platform, or 0.5% if investments are managed by a discretionary fund manager (DFM).

For clients’ investment solutions, Thornton uses DFMs Quilter Cheviot or Thomas Miller, which both have a presence on the Isle of Man. Sutton says the early adoption of Quilter Cheviot has kept clients’ fees low over the years: 0.75% for portfolios of less than £1 million and 0.5% for portfolios more than £1 million. The fees for Thomas Miller are 0.75%.

Throughout the year, clients are entitled to a forward planning meeting and unlimited contact with the firm. Thornton acts as a gatekeeper, ensuring providers are doing what they say they will. The firm is on hand to update the client’s financial plan if anything has changed.

Name(s): Claire Phillips

Firm: First Wealth

Location: London

Fee structure:

In a free initial meeting, First Wealth clients receive a data analysis, lifetime cashflow modelling and a report called 'Your Financial Plan.'

'The vast majority of people who have had a "Your Financial Plan" review might not want to do every single thing within it. But they will want to work with us,' Phillips says. 'Going through the process is a good test of their commitment to us as well.'

There is enough in the plan for clients to take it and implement it themselves.

Alternatively, First Wealth charges £2,000 for implementation. If the client goes ahead with cash investments or transfers a pension or ISA at this stage, there is a 1% initial fee.

But why keep this step so distinct from the rest of the service? Because, Phillips says, First Wealth wants people to know it is providing the service for them, not so clients then need to invest a certain amount with the firm.

Previously the initial fee that came after the initial report was between 1% and 2%. But, she says, it was brought down to 1% to ‘lower the barrier to entry’.

For ongoing services, clients pay a 1% advice fee. For this they can expect at least one review each year. Each one looks at the client’s attitude to risk, their portfolio performance against their goals and updated lifetime cashflow modelling.

For the 1% ongoing fee, clients also receive an annual portfolio rebalance and an annual valuation. Throughout the year clients can get in touch about their portfolio or any other financial matter, adapting their planning goals if needed.

They can also view their consolidated valuations and platform holdings via a platform login.

Name(s): Mark Insley

Firm: Ascot Wealth Management

Location: Ascot

Fee structure:

Insley is currently splitting his business into three: Ascot Wealth, AWM Virtual Wealth and Impulse Plan. Ascot Wealth Management will remain the umbrella brand.

Ascot Wealth will be the existing service of independent, mainly face-to-face advice.

AWM Virtual Wealth will deliver the same level of service, but by video only.

Impulse Plan is a new, restricted, hybrid robo-human offering, largely using white-labelled technology from True Potential.

Insley says he wants AWM Virtual to be separate, as its brand will attract people specifically seeking video advice.

The firm has a wide array of fee options depending on whether clients want transactional, ongoing or specialist advice, for example. They can pay by percentage or retainer, but most do the former.

Face-to-face advice is tiered between 1% and 3% initial, and 1% for ongoing. AWM Virtual will charge up to 1% initial and 1% ongoing.

For the ongoing fee, clients receive as many review meetings and contacts as they need.

At first glance, AWM’s fee structure appears labyrinthine. But Insley says clients understand the structure once it has been explained. Breaking it into so many options gives them more choice and makes sure they know exactly how much they are paying for what.



Name(s): Tamsin Caine

Firm: Smart Financial 

Location: Cheshire

Fee structure:

Smart uses the six-step advice process from the Institute of Financial Planning (now part of the Chartered Institute for Securities & Investment).

Around 18 months ago, it changed its fee model for new clients from percentages (1% initial plus 1% ongoing) to fixed fees. Both the initial and ongoing annual fees are now £3,000 minimum but typically £5,000 each.

Ongoing clients receive one face-to-face and three phone or Skype meetings a year. They also get unlimited contact, regular communications and client events.

Caine says she calculates fees according to value and complexity based on her experience. However, the firm is looking to put more structure around that, to help new advisers. She says percentages are a bad charging model because a client who invests £500,000 gets the same service and value as one that invests £200,000.

'Fixed fees are also important because robo-advisers will do much of the investment process in the future. But robots can’t do the relationship bit. It will be difficult for them to empathise,' she says.

Name(s): Carl Roberts

Firm: RTS Financial Planning

Location: Milton Keynes 

Fee structure:

RTS charges nothing for initial work and implementation; and fixed fees for ongoing work.

Entry level clients pay £37 a month for guidance and a passive investment portfolio if suitable. They receive an insurance review, but no financial planning or investment review. All clients receive access to Moneyhub.

Tier two clients, who make up the majority of RTS work, pay £127 a month and also receive a financial plan, any initial work such as pension consolidation, and two meetings a year.

Tier three pay £397 a month and receive all the above plus four meetings a year. These tend to have more complex needs such as trusts, wills, powers of attorney and intergenerational planning.

Roberts says these fees are all calculated according to the average time spent based on £150 an hour.

Why no initial fee or percentages? 'If you have an ongoing relationship, why do you need to charge up front?' he says. 'It is misleading to say there is lots of work to do up front. You can gradually implement the plan over the year. Advisers charge initial fees because they need to pay for all their staff and offices.

'Clients are still being ripped off. Too many advisers are pseudo-investment managers, charging 1% and not doing much for it. If they use an active strategy, clients could be paying close to 3% in total and only getting 5% investment returns. I am paid for the guidance, technical expertise and tax planning. The time I spend on that is roughly the same for everyone, so one shouldn’t cross-subsidise the other.'

Roberts refers to the Mifid II directive, which requires all costs to be reported to clients in pounds and pence.

'The trouble is 1% a year sounds small,’ he says. ‘Mifid II could help by showing clients the pounds and pence. Some clients never switch advisers due to inertia. But we must get them to realise there is another way.'

'I don’t see how people can continue to charge percentage fees, which are still like commission. I wonder how many young advisers are walking the talk on this. If they don’t, they may sink back into ripping clients off.'

Name(s): Tom Wilcox-Jones

Firm: White Oak Financial Planning

Location: Chester

Fee structure:

For new White Oak clients seeking planning and investment advice, Wilcox-Jones does not charge a fee for planning. However, there is an implementation fee of 3% on the first £50,000, 2% on the next £50,000, 1% on the next £150,000 and 0.5% thereafter.

The ongoing fee is 1% for clients with £150,000 or less, and 0.75% thereafter.

This means White Oak’s typical client, who has around £300,000 to invest, would pay 1.3% implementation and 0.75% ongoing. But someone with £50,000 could end up paying 3% implementation and 1% ongoing.

'That’s why I have to ask myself whether I am really adding value,' Wilcox-Jones says. 'And at the moment I would have to turn someone with £50,000 away.'

He is working with Intelligent Office to build an automated online service for these lower-value clients. This will have no implementation fee, a risk-profile questionnaire, and pre-made model portfolios on the Cofunds platform. It will produce automatic reports and valuations and access to White Oak’s client portal, which is also provided by Intelligent Office.

The Personal Finance Portal has already been soft-launched. It is a place where all of a client’s information can be stored and accessed by the client and Wilcox-Jones via a password. Wilcox-Jones thinks this will be a better way of providing sensitive information to clients once the general data protection regulation comes into force in May.

Name(s): Gaynor Rigby

Firm: Equilibrium Asset Management

Location: Manchester

Fee structure:

For portfolios up to £1.25 million, Equilibrium charges 0.38% initial capped at £3,125, 1.25% implementation capped at £10,500, and 1.25% ongoing charge capped at £9,375.

For assets over £1.25 million, it charges 0.25% for initial, capped at £11,250; and implementation at 0.84% on the first £3 million, 0.5% for £3 million to £6 million, and negotiable above that.

The ongoing fee for sums over £1.25 million is 0.75% on the first £3 million and 0.25% above that. Portfolios over £6 million are quoted individually subject to a minimum of £30,000.

Fund manager fees on the new Oeics are 0.25%.Coupled with a high average funds under advice figure of around £750,000, this results in a very high (compared with other cover stars) recurring income per active client of £7,300.

Following publication of our 2010 cover star feature, Equilibrium’s ongoing fee, which was then a straight 1.5% (rather than being split between 1.25% for advice and 0.25% fund management) drew some criticism from commentators.

This fee is still higher than most cover star advisers. Rigby says they are confident they provide good value for the fees, and the firm still offers its money-back guarantee for any client who is not fully satisfied.

For the ongoing fee, clients receive as many review meetings as they need. Smaller clients tend to have one or two a year, while large clients average four.

They also receive invitations to in-house events and a range of communications, investment updates and videos explaining important changes.

Name(s): Carolyn Gowen

Firm: Bloomsbury Wealth

Location: London

Fee structure:

Typical clients of Bloomsbury are business owners or high-earning executives. They have fairly complex financial situations and an average portfolio size of around £2.8 million, although this ranges from around £500,000 to £25 million.

For its clients, Bloomsbury has two charging options: as a percentage of assets under management (AuM) that encompasses both financial planning and investment management, or a structure in which financial planning fees and investment management fees are separated.

The decision of which structure to use is left to the client. But in both cases it involves a free initial meeting, 'which is like a first date: do we like them, do they like us?', and a free second meeting where the advisers present clients with a financial plan. 'They get a lick of the lolly to see what we do,' Gowen says.

If someone then decides to become an AuM charging client they will pay an implementation fee of around £3,000 and 1.1% ongoing on the first £2.5 million. This ongoing fee, which covers financial planning and investment charges, gradually reduces and after three years there is a 15% loyalty discount.

The alternative fee structure includes the same implementation cost and 0.4% on assets being managed. The fixed financial planning fee can then be invoiced monthly, quarterly or annually depending on what the client prefers.

'The fixed fee depends on the complexity of the client’s affairs. We know we will do most of the heavy lifting in the first one to two years so the fee will drop after that,' Gowen says. 'We’re very keen to pass time and cost saving on to clients.'

Name(s): Stefan Fura

Firm: Furnley House

Location(s): Leicester, Leamington Spa, Northern Ireland

Fee structure:

Furnley House has three client segments: foundation, premium and bespoke.

Foundation clients pay up to 3.5% initial, including any implementation of new investments, and 0.5% ongoing. They tend to have a pension, but no other savings or investments. They receive an annual meeting and brief investment report.

Premium clients pay 2.5% initial and 0.75% ongoing and typically have between £100,000 and £400,000, with a mix of pensions, savings and investments. These clients go into an in-house portfolio, with detailed quarterly updates. They receive an annual planning meeting, or two if they need; and are introduced to client relationship managers.

Clients with large portfolios and/or specific complex needs around inheritance tax or multi-generational planning are on the third tier, which is bespoke. They pay fixed initial fees, plus between 1.5% and 2% implementation, and up to 1% ongoing. Both premium and bespoke clients have access to the firm’s client portal.

Furnley House has around 1,600 non-active clients mostly from mortgage work and employees in corporate schemes. But it receives no ongoing remuneration from these clients.

Of its 1,500 active clients, around 1,075 are corporate client employees who also pay no ongoing fee, but their company pays a fixed fee or retainer for some level of service to employees. The remaining 425 active clients are private individuals paying an average recurring income of £1,700.

'We have done lots of work on costing and base the fees on the time cost and competitor analysis,' says Fura. 'We are comfortable that the charges cover our profit.'

Name(s): Rod Milne and Colin Hayden-Cook

Firm: HFS Milbourne

Location: Guildford

Fee structure:

HFS Milbourne charges 3% for investments up to £150,000 and 1% ongoing for a typical client using its model portfolios.

Clients with larger amounts to invest are charged a lowe initial fee. Milne says there is a fee matrix based on the cost per hour of advisers and paraplanners than can be used case by case.

Clients can expect around 14 points of contact a year: one or two meetings, depending on the size of the portfolio; four quarterly rebalancing emails; newsletters and other notifications; and budget reports.

HFS Milbourne sometimes bills law firms directly, or it will bill clients, albeit via their lawyer, depending on the nature of the service.

The hourly rate is £325 for the senior advice team and director level. Milne says this is based on the cost of each person's time. It allows the firm to increase fees when law firms, as theyoften do, add pieces of work on top of what had originally been agreed. It also sits broadly in line with what lawyers are charging locally, Milne claims.

Milne and Hayden-Cook know they are are not the cheapest advisers but are very happy to stand by their fees for the value of the work that they do. They say this is something lawyers and lawyers' clients seem to understand. 

Name(s): Keith Churchouse 

Firm: Chapters Financial 

Location: Guildford

Fee structure:

Chapters charges a fixed fee for all initial advice and implementation, calculated at £315 per hour for all staff work, regardless of seniority. Ongoing work for new clients is charged at 0.75% a year. 'We can normally calculate it back to the hourly rate to demonstrate the value,' says Churchouse.

For the ongoing fee, clients receive unlimited access; regular updates and news on market changes; annual meetings; extra valuations during the year; and a quarterly newsletter written in-house.

Average recurring income per active client is around £1,200. Churchouse says it takes around three hours to prepare for and complete a review meeting.

There are approximately 50 inactive clients who pay no remuneration to Chapters, although it may still receive a small commission from historic plans, where applicable.

'These clients still receive our regular focused newsletter and contact on policy issues identified by us, or contact from them, when required,' says Churchouse. 'We are ready to re-engage as the client requires, maintaining appropriate records in the meantime.'

Name(s): Warren Shute 

Firm: Lexington Wealth Management

Location: Swindon

Fee structure:

Lexington charges around £1,495 for initial planning, depending on complexity. For ongoing work, it charges a retainer of £85 to £150 a month. For investments, it charges an additional 1% up to £2 million; 0.85% on the next £3 million; 0.75% on the next £5 million; 0.5% on the next £10 million; and 0.4% above £20 million.

For the retainer, clients typically receive one financial planning meeting a year and unlimited contact. But a typical client has £370,000 to invest, so the total ongoing charge could therefore be around £5,000 a year, excluding fund or platform charges.

'The retainer is for the financial planning,' explains Shute. 'If they invest, they have additional needs, such as tax calculations and work around the investments, so that is charged separately.

'My aim is not to compete [with those who say that’s expensive]. Clients only pay the fees if they think the service is valuable. We go above and beyond for them and they are happy. We calculated the fees based on how long it takes us to look after clients’ affairs, including meetings and contacts, throughout the year.'

Name(s): Helen Howcroft

Firm: Equanimity IFA

Location: London

Fee structure:

Equanimity was fee-based prior to the retail distribution review but it has since changed its structure. It used to charge 3% initial and 0.5% ongoing.

'We used to keep really accurate timesheets to work out what we should be charging,' says Howcroft. 'These showed we were charging too much up front and not enough ongoing.'

Those fees have been cut, and the firm now charges a 1% initial and implementation fee and 1% ongoing. The ongoing fee is then reduced as clients obtain more than £1 million assets under advice. It is reduced further for more than £2 million. 'I find it really difficult to justify ongoing advice fees of more than £10,000 per year,' says Howcroft. 'It doesn’t sit comfortably with me.'

There is a fixed fee for financial plans, which is generally £3,000 to £5,000 for three 90-minute meetings, depending on the complexity of the work required. This is then deducted from the implementation fee if a client decides to go ahead with the plan.

For this clients typically receive two financial planning meetings a year, with contact in between if necessary. In October there will typically be a meeting to discuss the cashflow modelling plan with clients, which looks at the bigger picture. The second meeting is at the end of the tax year. Clients also receive newsletters every two months with updates, such as news from the Budget.

She has done transactional work for a few clients but Howcroft says she tends not to take this sort of client on. Transactional work is largely limited to divorce clients, because she finds the work rewarding.

Name(s): Natalie Wright and Andy Springford

Firm: Mazars Financial Planning

Location: London

Fee structure: 

Mazars’ initial fees are fixed or hourly from £100 to £300. These fees include implementation.

The ongoing fee is 1% or negotiable at higher levels. This covers as many financial planning and cashflow review meetings as clients need; the investment proposition; and seminars and other events.

Springford says: 'We are not trying to be the cheapest. People often move to us because we can provide every service under one roof, including planner, investment manager, tax accountant, business accountant and corporate finance specialist.'

Mazars’ average funds per client was around £350,000 last year. However, this has now increased to around £500,000, making the average ongoing fee £5,000.

Mazars also sends new planners on a fee negotiation course. This recovers its costs many times over as it helps them articulate the value they add, which can often be daunting to new planners, says Springford.

Name(s): Jason McGuigan

Firm: Critchleys

Location: Oxford

Fee structure: 

McGuigan says the firm’s fee structure has not changed since New Model Adviser® last profiled Critchleys in 2008.

It typically charges between £2,000 and £5,000 for a financial plan, depending on the complexity, a 1% fee for implementation of that plan, and a 0.75% annual retainer for ongoing service. There is also a fixed fee for non-regulated advice, for example if the work requires bringing in a lawyer.

For this clients with more than £200,000 with the firm typically receive an annual review, although there is a lower-touch service – access via email or telephone – should clients prefer this.

For clients with more than £700,000, Critchleys offers a 'diamond service', which integrates tax advice, financial planning, consultancy and compliance. 'We’ll do clients’ tax returns for them as part of this service and they love that,' McGuigan says.

Name(s): Chris Shaw and Mark Dolby

Firm: Beaufort Financial 

Location: Reading

Fee structure:

Beaufort Financial (Reading) offers hourly rates, fixed fees or percentage-based fees. The latter are up to 1% initial (minimum £3,000) and up to 1% ongoing, depending on individual needs. The average ongoing charge is 0.68%.

The firm has three ongoing service propositions. ‘Financial advice’, for those paying £2,500 to £5,000 a year in fees, includes annual reviews, including cashflow planning, and offers unlimited contact.

'Financial planning'– for £5,000 to £7,500 – includes an annual cashflow report, additional ISA work and two annual meetings.

'Wealth management' – for those paying £7,500 to £10,000 a year – includes a more detailed cashflow report, ongoing EIS and VCT work, and quarterly reviews.

Around 65% of clients are in ‘financial advice’, 30% are in ‘financial planning’, and 5% are in ‘wealth management’.

It takes up to 15 hours a year to look after a ‘financial advice’ client, says Shaw. ‘The charges and service levels are based on comparison with peers, and the cost of providing the service, based on hourly rates of £250 for a director, £200 for an adviser and £100 for administration,’ he says.

The firm has 4,600 transactional clients on its database, but does not receive any ongoing fees from them.

Name(s): Paul Hayden Jones and Graham Kilkelly

Firm: Hayden Kilkelly

Location: Birmingham

Fee structure:

Hayden Kilkelly charges a minimum upfront fee of £750, which may be partially or fully waived on implementation. Beyond this, the initial advice charge will vary depending on assets under advice.

The first £200,000 is charged at 1.5%, the next £200,000 is charged at 1%, and the third £200,000 is charged at 0.5%. No fee is charged on assets beyond the value of £600,000. As such, the maximum initial fee is £6,000.

Hayden Kilkelly is currently assessing its ongoing fees, and is looking to implement a ‘financial scorecard’ that will minimise cross-subsidy. At present, Hayden Kilkelly has a minimum ongoing fee of £1,125 per year, and ongoing fees are fixed at 0.75%.

For this, clients receive structured reviews. These consist of an annual meeting, a lifetime planning forecast, a view of existing plans and investments, a review of attitude-to-investment risk, and income tax and inheritance tax analysis.

The firm provides advice to family and close friends free of charge. Hayden Jones and Kilkelly justify this by saying if their friends were mechanics or builders, they would expect the same treatment.

Name(s): Cath Bowden and Andrew Goodwin

Firm: Truly Independent

Location: Carlisle

Fee structure:

Truly Independent charges bespoke fees up to 4% initial and up to 1% ongoing, depending on complexity. A typical client with £45,000 would pay 3% initial and 0.5% ongoing.

Many new model advisers believe 3% and 4% initial is too expensive, but Goodwin says: 'It’s just a method for getting to the pound value of what it costs. We operate very tight profit margins of 10% or less.'

He pointed out that, with 0.5% and sometimes less ongoing, compared with the 1% many advisers still charge, most Truly Independent clients would pay much less in the long term.

Recurring income per active client is £249, up from £54 in 2013. It appears this part of the business is therefore not yet profitable, and Truly Independent is still relying on initial fees to stay in the black. One solution for this could be setting a minimum for ongoing work as currently there is none.

Bowden says: 'Our advisers are self-employed so they have their own costing, which varies based on their time and their efficiency.'

For the ongoing charge, clients receive seven service points, including annual reviews, access to their adviser whenever they need, secure messages, and real-time valuations through the client portal.

For further service points such as financial health check, annual rebalancing, and tax planning, the fee is bespoke.

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