InvestmentsAug 2 2017

Investors reveal what they will pay for advice

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Investors reveal what they will pay for advice

Investors will pay almost two-thirds more for advice when investing £200,000 than £20,000, according to research.

Analysis by The Plaforum found that the more consumers invested, the more they were willing to pay for assistance.

It found investors are typically willing to pay £200 for financial advice when investing £20,000 – the equivalent of 1 per cent of the lump sum.

Meanwhile, those investing £200,000 would be prepared to pay £616.

While this is more than three times the sum for the smaller investment, it is equivalent to just 0.3 per cent.

But the Platforum warned it was still short of the average adviser charge of 2.2 per cent for an initial consultation.

It said there was a major mismatch in what investors were willing to pay and what advisers were charging.

Some 44 per cent of UK investors said they do not pay for advice. Just 16 per cent of those surveyed said they would contact an adviser for help investing £20,000. That rises to 46 per cent of people investing £200,000.

Adrian Lowcock, investment director at Architas, said: “Too few people look for advice when their investments are small because the upfront costs can be relatively large, but taking advice will help investors avoid mistakes and could boost their wealth.

“Aside from the cost, the biggest hurdle is that it is hard to know how much you will gain from taking advice and for people with fewer assets it might feel like that cost outweighs any potential benefit.”

Figures from Unbiased show investors should typically expect to pay £500 for an initial financial review and after that an hourly charge of £150. It estimates that at-retirement on advice on a £100,000 pension pot would cost around £2,000.