Today on the podcast I talk about fixed fees and charges and before you go and take a listen and read any further, I wanted to take a moment to explain with you what they are & the difference between them.
I’ll start with explaining the difference between an independent financial advisor and a financial planner.
If you are speaking to a regulated financial advisor, they may call themselves a financial planner as well. They are regulated by the Financial Conduct Authority, therefore the advice that you are given is regulated. On the other hand, a financial planner makes suggestions and coaches clients by giving them factual information. They’re actually more of a money coach, or there’s more of a coaching kind of role. This means, you’re not gonna have the same kind of regulatory support. So somebody could call themselves a financial planner, but that doesn’t mean that they’re actually a regulated advisor.
If you are wishing to have regulated financial advice from a qualified financial advisor in a regulatory process, make sure you are speaking with a regulated advisor. This means you are taken care of and given such a duty of care, under a regulated process.This also means that you can be compensated, and if you have a complaint, it will be dealt with adequately in a particular way.
The difference also between a regulated financial advisor and financial coach is the way they charge. Financial advisors charge either by non-contingent or contingent charging. Non-contingent charging is where you are charged for the advice, because the work is all done regardless if the advice is to move your funds or not. Contingent charging is where you are charged if you go ahead with the advice. The charges that financial advisors charge are as they are, because they have a huge amount of red tape that they have to do for clients, and a huge amount of regulation that they have to do to continue professional development. They also have to have a certificate of professional standing. Plus, there’s hours and hours of work that can go into one simple piece of business.
Some financial advisors charge per hour, some charge fixed rates. There are those who also charge by percentage of the fund to be invested which amounts to 1-3%. Some charge both an advice fee and an implementation fee and that can be a fixed fee and a percentage or vice versa. Financial advisors have levels of service and they will charge a certain amount for doing certain things. And there are also who charge the same across all clients.
When it comes to charges, it’s working with the right kind of advisor that you know, like and trust. It’s a long term relationship. And a financial advisor isn’t just for the tax year. Again, it is an ongoing long term relationship. You want to make sure that they are adequately qualified and are working for the right kind of business. More importantly, they’re not going to just move every five minutes, because client ownership of the client base is vital.