Advisers have given a cautious welcome to a new tool claiming to reveal and compare the amount of commission consumers are currently paying through their investments.
Execution-only service Rplan's tool shows the initial and ongoing commission paid through 31 discount brokers, as well as a ‘typical adviser' and ‘typical bank/insurance company'.
The company itself, which offers financial planning tools and facilitates investments through the Cofunds platform, takes no initial commission and rebates at least 50% of the ongoing commission, capping this at £15 a month.
It claims £10,680 invested in an ISA every year for ten years would result in total commission (initial and ongoing) of £7,561 through a 'typical adviser', compared to £1,228 through Rplan.
Although she welcomed any tools which provide consumers with more information, Philippa Gee, managing director of Philippa Gee Wealth Management, was concerned it may unnecessarily push some away from advice.
"You want people to be aware of the charges so they don't get ripped off, but you don't want them to be so concerned they go to execution-only when it's not appropriate," she said.
Meanwhile, Alistair Cunningham, director of Wingate Financial Planning, questioned the methodology behind the tool, which is only based on the top 10 best-selling funds on the Cofunds platform, and suggested there was no such thing as a ‘typical' adviser.
"What is a typical adviser? It isn't what we do and it's not what a lot of people do.
"By the method they've used, they've said cost is the same as commission. Less than 12 months from now, commission will cease to exist."
Andy Creak, CEO of Rplan, explained how the 'typical adviser' example was based on a 3% + 0.5% model.
"We want to be very open about how we've done the calculations. This is all about starting a debate, not giving all the answers," he added.
"We're not offering advice and we think there is a big role for advice going forward for clients. We're simply highlighting the charges.
"We are trying to disclose the charges element and what people should be reading next to this is what they are getting for it."
Try out the tool HERE
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