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Adviser questions charges used by Nest

The co-director of Kent-based IFA Andrew Oliver & Co was responding to concerns raised by the FCA in July that some advisory companies had not correctly disclosed post-RDR charging structures to their clients, particularly those charging 3 per cent and 0.5 per cent from investment. He said Nest employed a similar charging structure by taking a percentage of the fund.

Mr Oliver added: “Nest imposes a similar charging structure of 1.8 per cent of initial contributions and a 0.3 per cent annual management charge based on fund value, so why is this concept perfectly acceptable for a government-borne scheme but not for financial advisers?

“This is a classic case of ‘don’t do what we do, do what we tell you’. There is so much ambiguity with charging, with the ‘three plus a half’ structure deemed in some way to be unfair.

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“There seems to be a desire to compare the advisory community with lawyers or accountants, but IFAs carry a much higher risk and I believe carrying this risk should have some reward.”

He claimed that any adviser adopting an hourly charging structure could struggle to survive.

Mr Oliver added: “There seems to be this thing in the industry that everyone is allowed to earn a good living apart from advisers. We pay the levies that support the whole industry.”

RIGHT TO REPLY

Graham Vidler, director of communications for Nest, said: “Nest doesn’t use consultancy charging, which is a fee paid from members’ pots to advisers for advice given to an employer.

“Nest is run on a not-for-profit basis by an independent trustee.

“The combined charge – equivalent to 0.5 per cent AMC for most members – is used to cover the costs of running the scheme and administering members’ pots. Nothing else.”