So what did clients say when you told them about your new RDR-inspired charging structure? Did anyone bat an eyelid?
For many advisers, the ‘fees’ conversations they once had with clients are a distant memory. But for others, changes introduced by the Retail Distribution Review (RDR) meant many had to restructure their models and tell their clients all about adviser charging. So, how did clients react to the news?
Anthony Badaloo, principal, Church Hill Finance
“Many product providers are facilitating adviser charging, but some clients can’t get their heads around the concept of writing a cheque for advice that doesn’t lead to a product. Three of my clients have said: ‘there’s no way I can pay for that’ since the introduction of RDR. They seem to think I’m expensive. I say: ‘I’m sorry you don’t see the value in my advice’ but, other than that, there’s not a lot I can do.
“One client said he had heard on the radio that the average adviser fee was £170 per hour, but I charge more than this. I said: ‘That’s for the average. What do you think I’m worth? I’m not an average adviser, I’m an extraordinary adviser’. That particular client has had a lot of free advice over the years, but now I shall be keeping a log of everything and he’ll be receiving a tidy invoice once a quarter and probably won’t be bothering me quite so much anymore. Perhaps he’ll go to the Money Advice Service.”
‘You might want to sit down…’
Harry Katz, principal, Norwest Consultants
“My clients have been paying fees for donkey’s years, but that doesn’t mean I haven’t had an awkward conversation or two around the RDR and changes to the way I am remunerated.
Most platforms, in my view, have unworkable ways of taking charges for funds under management, so I am switching my clients – for free – to a platform that takes charges more sensibly.
I have sent all affected clients the paperwork, but they often get irritated. They’ll say: ‘Why are you showing me this, it’s too much paperwork.’ I am like a duck to some clients: they see me afloat but don’t see my feet paddling away underneath. Ultimately, there is only one number that matters – and that is how much their investment is worth.”
Brian Tabor, director, Care Matters
“Like many advisers, we were fee-based prior to the RDR, but there were a few clients we hadn’t seen for a while. A lot of our business is in long-term care, so many of our clients haven’t seen an adviser for a while, maybe 20 years ago or so when I or somebody else might have arranged their mortgage.
“Comments we have received from these clients included a not entirely serious: ‘I have to pay? I suppose I thought there would be a money tree.’ But the advice market was very different when they last sought advice. We also often receive a frown of surprise when we discuss RDR, but this often leads to a conversation about our fees, which tends to be straightforward.”
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