Brits expect to pay £38.90 an hour for advice
Clients would accept paying £155 in fees for a full financial review after all IFA businesses move to an adviser charging model in 2013, research by CoreData has found.
The 77-page study, Consumer Fee Threshold and Appetite, assessed the expectations of 1020 advisory customers following the implementation of the retail distribution review.
It found clients would expect to pay an average of £38.90 an hour to use an adviser and would expect a full financial review to last four hours.
Of those polled, 54.1 per cent claimed to pay for advice, while 37.8 per cent believed they do not pay for advice.
The research found there were 2.1m households in the UK that rely on the services of a financial adviser.
According to the analysis, 496,911 households already pay a flat yearly fee to their adviser, 350,761 pay through the product, 233,840 pay an hourly fee, 58,640 pay an upfront fee while 29,230 said they pay in other ways.
The CoreData research found that as investors grow older, they are less motivated to hire an adviser, although it said this could be because they have already got a financial plan in place.
It found two-thirds of those aged 29 or less and more than two-thirds of those aged between 30 and 39 said they would use an adviser.
However only 53.1 per cent of those aged between 40 and 49 and half of those between 50 and 64 said they would seek advice.
The study also identified a small gender difference when it comes to financial advice, with 3.4 per cent more men than women would consider talking to an adviser when considering a review of their financial positions.
It said: “This could imply that women are perhaps more detached from their financial affairs, do not see the value of advice, are not as involved in household saving and investment decisions or that they are simply less trusting of the financial industry and therefore less inclined to appoint a professional in this regard.”
Craig Phillips, principal of CoreData Research UK and Europe, said: “A key challenge for advisers is in gently articulating the cost of delivering a full financial plan. Clients need to appreciate advice is much more than just face-to-face time spent with an adviser.”
David Penny, managing director of Somerset-based Invest Southwest IFA, said: “We would need to be paid a lot more than £155 to make our business feasible. There is clearly a big gap in the expectations from clients.
“The costs could come down if there were different levels of service.”