Investors will Pay For Advice – If The Price Is Right

Investors are willing to pay for advice – providing the price is right, according to new research.

If investors are paying a percentage fee, the target they have in mind is £200, or 1% of a £20,000 lump sum.

But as the amount for investing grows larger, the fees investors are ready to pay get stingier.

For advice about managing a £200,000 lump sum, most investors are only ready to pay £616, which amounts to just over 0.3% of their cash.

Investor expectations fall short of what a professional advisers charge, says the study by financial research firm Platforum.

How much an IFA charges

The average charge for an initial consultation for most advisers is 2.2% of the investment value.

For £20,000, that’s £440 and for a stake of £200,000, the charge is £4,400. Both are likely to come with VAT on top, making the fee range between £528 and £5,280.

The cost is a major factor dissuading investors from taking professional investment advice, says the firm.

The research went on to show 44% of investors do not pay for advice. Only 16% agreed they would seek advice for a £20,000 lump sum investment, rising to 46% looking for help with £200,000.

However, other recent research by Platforum reveals only 3% of savers do not invest due to the cost of advice. Instead, 23% do not consider they have enough disposable income and 21% believe investing is too risky.

Find out the cost early on

The study also found 69% of savers planning to invest over the next 12 months will do so through their bank, which is unlikely to offer independent advice.

Other research from find-an-IFA web site Unbiased found investors expect to pay around £500 for an initial consultation and £150 an hour for ongoing advice.

The site calculated the cost of taking advice on investing £100,000 would come to around £2,000. In percentage terms, that’s 2% of the pot.

Not all IFAs charge percentage fees for their help. Some offer fixed fees, while others charge on a time-basis.

“Make sure the adviser gives an estimate of how long the work will take and discuss pricing at your first meeting,” the site suggests.

Free Pension Transfer Guide for Our Readers

Expat Pension Transfers Guide

iExpats.com expert writers have created a simple guide to Expat Pension Transfers just for you.

Find out how you could save tax, increase growth and investment opportunities with this simple, no-nonsense guide that will introduce QROPS, SIPPs and QNUPS options and talk through the pros and cons. Download the free guide by following the link below

Investors will Pay For Advice – If The Price Is Right
Rate this post

Leave a Reply