Clients and IFAs have wildly different estimates of the value per hour of independent financial advice in the build-up to 2012, research suggests.
Consumers value advice at an average £67 per hour whereas advisers say their time is worth £170, almost three times as much, according to a study conducted by Legal & General (L&G) Savings.
There is also a significiant mismatch between how long a client expects the advice process will take, and how long an IFA says it will.
Based on the responses of 360 individuals, the average consumer says advice should take no longer than four hours, whereas advisers say at least seven hours is required.
The findings strike at the heart of one of the key concerns about the RDR - consumer access to financial advice.
Danny Wynn, RDR and commercial director at L&G, says the results reflect continuing misunderstandings about what IFAs do and how they are paid.
"It has no doubt been the case because advice has been traditionally given away ‘free' it has been largely undervalued," he says.
In reality, this means IFAs will need to pay special attention to making sure their clients fully understand the true effort involved in delivering advice as well as the benefits.
"When worked through, I think this will lead many to come to the conclusion that a fee structure that simply replicates the existing commission model is not necessarily the most appropriate solution.
"The key lessons learned are perhaps, if clients are to be asked to pay for a service, they need to fully appreciate the value and be impressed."
Chris Cummings, AIFA director general, says: "Most research has found consumers are willing to pay around the £50 to £70 per hour mark for face-to-face advice.
"But if the IFA is able to explain where he or she can add value, that figure would rise."
Another finding in the study concerned consumers opting to go direct rather than visit an IFA for a holistic solution.
According to L&G, about 16% of clients who have seen an adviser will switch to buy direct rather than pay for full advice.
""This may indeed be a very good prediction of consumer reactions post RDR implementation," Wynn adds.
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