IFA Fee - Abridged + full advice

jamesd

xylophone said:

What exactly is the point of "abridged advice"?

It's a way for the FCA to make the FCA look less bad for making those advised not to transfer pay the same as those advised to transfer, when previously the not transfer advice was often free.

A firm is allowed to charge less for abridged advice than full advice, so it's a way that firms can still use to charge less for don't transfer advice. But it includes so much work that I doubt it can be cheap.

An alternative way to think of it is the FCA providing its own circumvention tool for aspects of its own regulation.

Whether firms recognise this and charge loss leader prices for it is something only time will reveal.

HappyHarry

jamesd said:

Starting on 1 October the FCA requirements relating to contingent charging (pay only if transfer) took effect.

Firms can charge different amounts for different service packages, for example:

a. full transfer advice, advice on best place to transfer to and advice on investments to use. May be most expensive.
b. full transfer advice but no advice n receiving scheme or investments. Likely to be cheapest.

...

Just to clarify, option b. above cannot be offered to a client. A client recommendation must include a recommendation on the final destination on the transferred funds.

sandsy

HappyHarry said:

jamesd said:

Starting on 1 October the FCA requirements relating to contingent charging (pay only if transfer) took effect.

Firms can charge different amounts for different service packages, for example:

a. full transfer advice, advice on best place to transfer to and advice on investments to use. May be most expensive.
b. full transfer advice but no advice n receiving scheme or investments. Likely to be cheapest.

...

Just to clarify, option b. above cannot be offered to a client. A client recommendation must include a recommendation on the final destination on the transferred funds.

Not if the client is a self-investor and wants to choose their own destination. But the transfer advice under option b still needs to take account of the self investor's choice, eg in any cash flow modelling.

HappyHarry

sandsy said:

HappyHarry said:

jamesd said:

Starting on 1 October the FCA requirements relating to contingent charging (pay only if transfer) took effect.

Firms can charge different amounts for different service packages, for example:

a. full transfer advice, advice on best place to transfer to and advice on investments to use. May be most expensive.
b. full transfer advice but no advice n receiving scheme or investments. Likely to be cheapest.

...

Just to clarify, option b. above cannot be offered to a client. A client recommendation must include a recommendation on the final destination on the transferred funds.

Not if the client is a self-investor and wants to choose their own destination. But the transfer advice under option b still needs to take account of the self investor's choice, eg in any cash flow modelling.

Apologies, I was trying to simplify things a little too far.

The advice must take into account the final destination of the funds, its appropriateness for the client, and the charging structure (should there be one) of the proposed investment.

I did not want to give the impression that anyone could turn up with a CETV and a proposed investment strategy and easily get a cheap positive recommendation from an adviser. 

Globelink55

Good Morning All, thanks a lot for all your rapid and informative responses. What a great resource the forum truly is. Very much appreciated, 👍

jamesd

HappyHarry said:

The advice must take into account the final destination of the funds, its appropriateness for the client, and the charging structure (should there be one) of the proposed investment.

I did not want to give the impression that anyone could turn up with a CETV and a proposed investment strategy and easily get a cheap positive recommendation from an adviser. 

What a client can do is seek the least set of bundled services that are subject to the transfer regulations. That means firms unbundling destination selection advice and investment selection advice unless they want to discourage those with transfers below the average £300,000 to £350,000 value mentioned by the FCA.

Clients can also seek firms with lower average transfer values to reduce the overhead included in fixed pricing. Wealth advisors with averages in say the million range would have far more in allocated costs  like indemnity insurance than a £90,000 transfer merits. A local adviser in a low income area is likely to be a better match.

I assume that there's also scope for traditional price segregation via brand segregation, plainly visible if you shop for "baked" beans with sausages at a supermarket and find a selection of add your own sausage and bundled sausage offers at various price points. It's a potential way to segment overheads in relation to pot size.