New Model Adviser - For professional financial planners

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

'I'm out': Alan Smith says percentage fees would fail on Dragon's Den

Alan Smith tells PFS Festival that percentage charging would not appeal to the Dragon's Den investors.

'I'm out': Alan Smith says percentage fees would fail on Dragon's Den

Advisers using percentage charges would not make it past the four investors on television show Dragon's Den, according to Capital Asset Management chief executive Alan Smith. 

Speaking at the Personal Finance Society Festival, long time flat-fee advocate Smith (pictured) said planners need to recognise that charging clients a percentage of their investments was not a good way of demonstrating value. 

He used the example of going before the panel on Dragons' Den, outlining increased life expectancy, pensions freedoms, tax changes, tax rules and showing that there is a huge need and demand for a financial planning service.

He continued: 'So they say "I'm interested, what are your numbers?" And you say "well what we do is we link our revenue to the stock and bond markets". They say "some years that will fall 20-30%, so your revenues will fall 20-30%". You can just imagine at that point them saying "I'm out".'

Smith said financial planning covered more than just investments, so charges needed to reflect this. 

'We are here to solve problems and move from managing money to managing lives.'

Smith presented the example of an early stage conversation with a client who had just sold his business for £3 million. The client had multiple properties and investments.

He recalled the client, upon clarifying that investing £3 million meant being charged £30,000 a year, £2 million being £20,000 a year, and so on, said 'you're mad!'

Smith added: 'That led onto a further conversation in my mind, which is how would other business people outside our industry look at the way most of us charge for our services?' 

Share this story

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
More Content
7155 -53 0.73% 02:08
More Content
More Content

BUSINESS

23 Comments Sipp firm stops accepting DB transfers after FCA dear CEO letter

Sipp firm stops accepting DB transfers after FCA dear CEO letter

Sipp provider Intelligent Money has decided to stop accepting defined benefit (DB) transfers following the Financial Conduct Authority’s 'Dear CEO' letter

ADVICE

Richards: Pensions dashboard must display charges

Richards: Pensions dashboard must display charges

A comprehensive unified platform could engage and motivate people to save, but it must be unbiased, transparent and regulated

twitter_banner

INVESTMENT