Research by the Financial Conduct Authority into retirement advice since the liberalisation of the pension market has revealed wildly different charges that clients are paying to access their nest eggs.
Some advisers are charging more than £2,000 for initial advice on an average pension pot of £47,000.
Research carried out by the regulator as part of the Financial Advice Market Review found initial charges for investment and retirement advice can vary between 1 per cent and 4.5 per cent on funds of between £30,000 and £50,000.
On the average pension pot - which according to the ONS is £47,100 - this means clients could pay an initial charge of anything between £471 and £2,119, an increase of 349 per cent.
On average, clients with funds worth £50,000 were being charged 3 per cent for initial advice – or £1,413 of the average pension pot.
Those with the smallest amount of savings - with funds worth £10,000 and below - faced paying up to 5 per cent, or a maximum of £500.
Ongoing charges tended to vary less and the FCA found they were between 0.5 per cent and 0.75 per cent on average.
But for smaller assets the charges could still be greater, with some firms charging 1.3 per cent for investments up to £30,000.
The report stated: “Our survey asked firms to provide data on pension pot sizes and amounts of investable assets of the customers (new and existing) that they have advised for retirement income, pension accumulation and investments.
“For retirement income advice post-pension freedoms, 46 per cent of customers had pot sizes of less than £50,000, 26 per cent had less than £30,000, and 8 per cent had less than £10,000.
“Overall, firms said that pension pot size was a relatively less important factor in their considerations about whether to take on a customer seeking retirement income advice.
“A customer’s personal circumstances and other assets and liabilities, as well as the potential for a future relationship with the customer, were the most important factors considered.”
Firms also told the FCA the initial hourly charges for investment advice were broadly independent of investable assets.
Across all the levels of investable assets, the median hourly charge for initial advice on investments was £180 an hour and the ‘middle’ 90 per cent of firms in the regulator’s sample charged between £100 and £300 per hour.
The FCA’s findings are based on a survey of 233 firms carried out in November 2015.
Philip Bailey, investment consultant at Hertfordshire-based Provisio Wealth Management, said: “4.5 per cent does sound high but post-Retail Distribution Review advisers have still go to make money and 4.5 per cent on £30,000 is not going to make an adviser rich.
“I guess that is the price of shifting to fees: clients can see exactly what they are paying but it might be a bigger number.”