When it comes to financial advice, do you get what you pay for? The answer to that question is sometimes harder to establish than it ought to be.
The majority of financial advice companies provide excellent value, given the well-established benefits of using the services of an adviser.
The question becomes a bit more problematic when discussing some advice companies, in particular St James’s Place.
Research has found that an investor entrusting £1m to SJP over 20 years would pay 45 per cent – or more than £990,000 – for the funds, advice and platform compared to the 29 per cent a DIY investor on Hargreaves Lansdown would have spent.
In response, SJP insists independent research has shown its fees are competitive and that it is misleading to compare the cost of investing with a portfolio that may have a wholly different construction.
Of course, there is nothing inherently wrong with something being expensive. Plenty of shoppers flock to Waitrose every day and most of them will doubtless know they could spent less by going to Lidl – that is how markets work. Different people value different things differently.
And the company’s results show the constant focus on its fees is not putting off new clients: 26,000 people decided to become an SJP client in the six months to the end of June.
But this only holds if you set out, clearly and unequivocally, how much you are charging.
The Financial Conduct Authority has said in the past it has no plans to introduce a standardised template for cost disclosure, despite having found “unacceptable” levels of disclosure during its previous review.
While advisers might see this as another layer of bureaucracy, perhaps it would do the profession good if there was a voluntary industry-wide standard.