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Which? warns advisers to be transparent over their fees

Which? warns advisers to be transparent over their fees

Consumer watchdog Which? has called on financial advisers to be more upfront online about charges, or face action by the FCA.

Out of 500 adviser firms surveyed by the consumer champion, more than two-thirds of financial advisers did not publish their fees and charges online.

It also found widely differing fees for the same advice. Some 349 did not list fees on their websites, while just two per cent of sites provided “genuinely useful information” such as a breakdown of charges. Average earners in need of guidance on the new pension freedoms can be charged fees as high as £3,750.

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Which? also found that only one in 50 financial advisers clearly published their fees and charges, meaning most customers had no advance indication of what they could be charged.

The mystery shopping exercise also found widely differing fees for the same customer issue. Advice fees on a £100,000 pension pot ranged from £100 to £3,750, with the average at £1,863.

Only a third of IFAs gave a rough idea of fees, and one in 10 refused to divulge costs even during an initial telephone enquiry. Advisers’ hourly fees varied from £58 an hour to £350 an hour, with the average at £164.

Richard Lloyds, executive director of Which?, said: “Good IFAs have nothing to fear by publishing fees online, and we believe that if some firms can do it, then the others have no excuses. We need IFAs to be much more open about charges or the regulator should step in and change the rules.”

Just last week, St. James’s Place moved to clarify its pricing structure to allay industry criticism over its charging structure, saying that with the exception of the external investment management fee, which varies depending on the individual manager running each fund, its charges were standard across the unit trust range.

Key findings:

349 out of 500 – or two-thirds of advisers – did not list fees online
One in 50 advisers publish fees clearly
Average cost of fees on a £100k pension is £1,863
Hourly fees range from £58-£350

Danny Cox, chartered financial planner at Bristol-based Hargreaves Lansdown, said its fees were clearly laid out on its website. He added: “One of the main benefits of RDR has been the improved transparency of adviser services, their costs and value. Not everyone wants or needs advice, but those who are considering taking advice should be able to compare costs and value much easier.”

ADVISER VIEW:

Phil Anderson, director of Aberdeen-based Phil Anderson Financial Services, said: “Our website says what we charge for mortgages. That’s often one of the first questions people ask. We have a free review meeting. There’s nothing to hide. For us it’s trying to gauge how much work would be involved.”