It comes after Schroders Personal Wealth — a joint advice venture between fund manager Schroders and Lloyds Banking Group — revealed its proposed fee structure would be less than half the cost of its biggest rival SJP and significantly lower than Brewin Dolphin.
Research by SPW, seen by FTAdviser’s sister paper the Financial Times, put SJP’s advice fees at 7.95 per cent for the first year and 2.95 per cent for later years while Brewin Dolphin’s charges were estimated to be 4.7 per cent for the initial year, dropping to 2.7 per cent after that.
By comparison, SPW expects customers to pay about 3.65 per cent of their total investment in their first year before total fees drop to about 1.9 per cent.
An SPW spokesperson said: “Our pricing is transparent and competitive. We know from experience and numerous studies have shown that professional financial advice generates value.
“We can play an important role in helping more people plan for the future and manage their finances with a professional service.”
SJP has since branded the figures inaccurate and a “wholly misleading” misrepresentation of its charges.
The FTSE 100 advice firm has hit the headlines recently with reports of large incentives for its advisers and sales people alongside hefty advice and exit fees.
Brewin Dolphin also said the data was inaccurate and misleading and said it could not identify any client scenario where the fees quoted would apply.
But advisers have argued that comparing the fees of big advice firms had little impact on the rest of the advice market.
Martin Bamford, managing director at Informed Choice, said: “This is a bit like Ferrari and Lamborghini getting into a price war.
“These so-called advice firms operate at the premium end of the market. Having lower fees than the likes of SJP and Brewin Dolphin isn’t much to be proud of.
“But of course, any reduction in fees is good news for the client. What we should all focus on is value for money, with higher fees hopefully leading to a more comprehensive service offering, not just expensive cufflinks and cruises for the salespeople.”
Alistair Cunningham, financial planning director at Wingate Financial Planning, agreed, adding the fee battle was “an irrelevance” and that independent financial advice could be accessed at lower initial and ongoing costs than the offerings from “high-profile wealth managers”.
Meanwhile, director at Satis Asset Management David Hearne said that “at those prices” it was like “Jimmy Choo and Louboutin starting a price war”.
He urged consumers to find a chartered financial planner instead, who “would be better qualified” and “probably cost you less”.
Mike Barrett, consulting director at the Lang Cat, agreed the price war was irrelevant to the wider advice market but thought smaller and independent advisers should not dismiss Schroders as not being a threat.
He said: “Like them or not, SJP are the largest adviser group in the UK and have built this success on anything but price.
“It Lloyds can replicate this success then I think the smaller advisers could find it harder to attract new clients.”
Mr Barrett added the market wasn’t price sensitive — as the growth of SJP and Hargreaves Lansdown had proven — because consumers selected and stayed with advisers for a range of factors such as trust, investment returns and peace of mind, not just cost.
Lloyds Banking Group and Schroders announced a joint venture into the advice market earlier this year (February 20), initially available to Lloyds customers but with plans to open to the wider UK market from Q4 of 2019.
Consumers wanting to access advice from the firms will need a minimum of £100,000 investable assets as it aims to reach a target of £25bn assets under management.
imogen.tew@ft.com
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