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Call for minimum advice fee to replace assets threshold

Minimum client investable assets are redundant in a fee-based world, an adviser has said, a day after a study revealed around one in six advisers now applies a minimum threshold of £50,000 post-RDR and that this asset hurdle is on the rise.

Jonothan McColgan, director and chartered financial planner at Combined Financial Strategies, told FTAdviser he disagreed minimum investable assets are needed and said a minimum fee might be a better idea.

He said: “I have a minimum fee policy and it has led to me doing work for clients that I would not have undertaken or earned on prior to RDR. It does tend to be more transactional work but valuable none the less.”

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Yesterday, a survey by online investment platform Rplan, revealed a quarter of advisers now require clients to have over £30,000 of investable assets, while 16 per cent require £50,000. A straw poll by FTAdviser showed that advisers agreed £50,000 was a realistic threshold for new clients.

William Hunter, director at Hunter Wealth Management, set £50,000 as his firm’s lower limit and added: “In theory we would consider a ‘transaction only’ but with an agreed acceptable to us ‘bespoke fee’ and no further ongoing service.

“We have, however, never needed to do this in practice.”

Colin Rodger, managing director at Alexander Sloan Financial Planning, who also agreed that £50,000 was a realistic minimum for new clients, was receptive to a minimum fee, estimating that three hours time - or £495 - would be acceptable.

Cleona Lira, IFA at 2Plan Wealth Management, said they have no minimum criteria, but it would be unsustainable if all clients had assets below £30,000.

“I enjoy the variety of working with different types of clients from different income backgrounds but where clients need formal advice, I do have a minimum fee requirement and sometimes the client cannot afford to pay this.

“Somehow I like to think they benefit from having the single initial consultation with me and consider this my pro bono work.”

Harry Katz, principal at Norwest Consultants, stated that it all depends on the definition of lower assets, adding that his practice does not have set fees.

“I don’t believe in minimums and maximums; I don’t charge by the hour anyway. The fee is initially assessed on various factors: the complexity of the case, how long it will take, whether the client is a pussy cat or a tiger, what will the funds under management charge be and will there be more business?

“You see it isn’t only how much you charge, but how big your overheads are. This is a business and regrettably not many advisers have experience of running a business other than in financial services.”

Justin King, Chartered financial planner at MFP Wealth Management, said it goes “much deeper than this”.

He said: “We offer a comprehensive wealth management service which is suitable to people who have assets of over £1m. Their complexity of their financial situation means we can deliver substantial value for the fees charged. People below this level don’t need our service and so wouldn’t benefit.