Shaun Sandiford, business development director at Axa Wealth, asks: how much would you pay for your own advice?
There has been a great deal of discussion recently around the price of advice in the post-Retail Distribution Review (RDR) world. It has included: How much are customers going to be willing to pay? How much are advisers going to need to charge? Do these two figures marry up?
Looking at a couple of pieces of research, there seems to be some disparity between the views of consumers and advisers.
A recent study from AXA Wealth, conducted by YouGov, suggested that consumers would be prepared to pay slightly more than £200 for a complete financial assessment. When you consider advisers spend approximately 16 hours (according to CoreData research) producing a client report, the hourly rate – of just £12.50 – is surely a cause for concern.
How much would you pay for your own advice
That same CoreData research, published earlier this year, suggested an average hourly rate for financial advice may be £38.90, which would make a complete financial assessment approximately £620 – considerably more than consumers seem willing to pay.
AXA Wealth’s research also suggests that, among consumers who are not currently paying for advice, but are willing to do so, the majority (63%) would prefer to pay for financial advice as a flat rate, rather than paying an hourly rate (12%) or a percentage of the money invested (16%).
These figures suggest consumers do not fully understand or appreciate the work that is done behind the scenes in producing, for example, a full financial assessment.
As financial advisers are trying to occupy the same space as solicitors and accountants, this again shows consumers are not valuing financial advice in the same way.
If the RDR is going to successfully position financial advisers alongside other professions, where consumers pay for specialist expertise, there needs to be a great deal of work done around the value of financial advice to address the current disparity.
Providers, advisers, government and regulatory bodies are all likely to play a part in this.
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