Why is the cost of advice so high?

Thrugelmir

ajfielden said:

Thrugelmir said:

ajfielden said:

Thrugelmir said:

ajfielden said:

Thrugelmir said:

ajfielden said:

Oh dear, the financial adviser was not best pleased when I said that the fee of £5k was rather high

Better things to do with their time. 

Absolutely. At £200/hour I wouldn't want to waste it either!

That's only for productive time though. Time spent on gaining potential new clients and mundane admin tasks has to be paid for as well. 

Are you an IFA?  I apologise if I cause any offence, but people shouldn't get offended if customers want to question any costs. And as a customer it's my right to do that, and also shop around to compare quotes.

No I'm not. However I've spent a lifetime in finance. I'm merely pointing out why time costs money. There's a perenial misconception as to the true cost of providing something. Whether it's of value to someone else is a totally different matter. As you say go elsewhere if you don't like what you've been quoted. Asking people to explain their costings is none of your business. Why should it be? 

Hm interesting view. Why should it be my business? Well because I'm paying, so I think it's reasonable to ask for a justification.
I'd like a degree of transparency. To be fair though, they aren't alone. Try asking a builder for a breakdown of costs. They've obviously gone through this process in pricing up materials, time, rates etc, so why not make the customer fully aware of how the quote has been calculated. If it's been done fairly of course

Does your employer provide highly detailed broken down cost quotes to customers? 

When you have your car serviced does the garage breakdown and justify their labour charge rate? 

PS. Finance isn't interesting. Keeping companies solvent and afloat isn't fun. Behind closed doors much goes on that people are unaware of. Survival is a continual challenge. 

wjr4

BritishInvestor said:

wjr4 said:

BritishInvestor said:

ajfielden said:

BritishInvestor said:

ajfielden said:

I've been on the Unbiased website, and their whole method of finding an advisor now seems to have changed. Previously you could pick from a list of presented advisors. Now you just go through a multi click process and they spit out someone they chose for you. I've done it twice now, and it came back with the same people both times.

Does this work?

https://www.unbiased.co.uk/advisers/financial-adviser?

Unbiased regularly change their logic for how people get steered towards a solution - arguably not always for the better.

Yeah thanks, that's what I was looking for - a list I can review and select from.

Great.

FYI - Unbiased have recently hiked their prices 

https://citywire.co.uk/new-model-adviser/news/unbiased-raises-cost-of-most-enquiries-with-tiered-pricing-structure/a1559257

which might mean that if you contact an adviser via the Unbiased they might not accept your enquiry as they now pay up to £130+VAT per lead (as well as for a listing).

You may therefore get a better response if you contact the advisers directly. 

This is the exact reason I’m not keen on unbiased anymore. Their fees are too high and I just hope that people contact me directly from there! They’ve also introduced a new feature where it says ‘new adviser’ if you change companies or open a new account with them (like myself). I’d try contacting those advisers as they are more likely to take on new clients than advisers who have too many clients already. 3% of money invested tends to be the standard charge but it is negotiable. 

While Unbiased is not ideal, the typical adviser profile on there is pretty average, tending to talk about:

1. Themselves (zzzz)
2. Investments (zzzz)

How on earth can you differentiate based on these profiles?

https://www.unbiased.co.uk/advisers/financial-adviser?searchId=19041135

If they instead focused on exactly the type of people they help (e.g those planning to retire in the next 5 years), I reckon they'd get a lot more traction and people getting in touch directly. 

As an IFA/planner, you don’t deal with specific clients. Every single client I’ve had has completely different needs, so I’d basically be writing every possible outcome on my profile. 

Linton

ajfielden said:

Thrugelmir said:

ajfielden said:

Thrugelmir said:

ajfielden said:

Thrugelmir said:

ajfielden said:

Oh dear, the financial adviser was not best pleased when I said that the fee of £5k was rather high

Better things to do with their time. 

Absolutely. At £200/hour I wouldn't want to waste it either!

That's only for productive time though. Time spent on gaining potential new clients and mundane admin tasks has to be paid for as well. 

Are you an IFA?  I apologise if I cause any offence, but people shouldn't get offended if customers want to question any costs. And as a customer it's my right to do that, and also shop around to compare quotes.

No I'm not. However I've spent a lifetime in finance. I'm merely pointing out why time costs money. There's a perenial misconception as to the true cost of providing something. Whether it's of value to someone else is a totally different matter. As you say go elsewhere if you don't like what you've been quoted. Asking people to explain their costings is none of your business. Why should it be? 

Hm interesting view. Why should it be my business? Well because I'm paying, so I think it's reasonable to ask for a justification.
I'd like a degree of transparency. To be fair though, they aren't alone. Try asking a builder for a breakdown of costs. They've obviously gone through this process in pricing up materials, time, rates etc, so why not make the customer fully aware of how the quote has been calculated. If it's been done fairly of course

I believe most customers for a service want the price specified before the work is done.  When you sell your house you want fixed prices from the conveyancer and the estate agent. If I am dealing with people who charge a bill after the event, eg lawyers, I cant help feeling they expand the work done/claimed to ensure the income they require.  It doesnt actually do the customer any good as the calculation cannot be checked.

If you as a service provider have to specify the cost of the work in advance you have no choice but to base it on averages and what income you need to justify your carrying on in business.  After that it is up to the market.

LV_426

Thrugelmir said:

Does your employer provide highly detailed broken down cost quotes to customers? 

When you have your car serviced does the garage breakdown and justify their labour charge rate? 

PS. Finance isn't interesting. Keeping companies solvent and afloat isn't fun. Behind closed doors much goes on that people are unaware of. Survival is a continual challenge. 

Yes they absolutely do! Many projects I've been involved with, particularly the case with consultancy based organisations, have provided detailed tenders to clients. These documents have budgeting details, and delivery timescales. Failure to deliver in line with this would often incur liquidated damages.

I'm not saying such detailed costing information should be provided here, but I would like to have a better idea of what I'm paying for, and how it's calculated.

On the subject of garage costs. I'll often verify their costs by pricing up parts and making a decision on their quote. But as with anything you buy, or services, there can be a huge difference in quotes. It's up to the individual to make a decision on whether it's value for money, or a rip off. I mean it's common knowledge that main dealers are extortionately expensive, and you can often get the same work done cheaper at an independent garage.

And this is after all, a money saving forum

Thrugelmir

ajfielden said:

Thrugelmir said:

Does your employer provide highly detailed broken down cost quotes to customers? 

When you have your car serviced does the garage breakdown and justify their labour charge rate? 

PS. Finance isn't interesting. Keeping companies solvent and afloat isn't fun. Behind closed doors much goes on that people are unaware of. Survival is a continual challenge. 

Yes they absolutely do! Many projects I've been involved with, particularly the case with consultancy based organisations, have provided detailed tenders to clients. These documents have budgeting details, and delivery timescales. Failure to deliver in line with this would often incur liquidated damages.

Been round this same loop many times in the past. Time for me to move on. I can see this discussion is going absolutely nowhere. 

dunstonh

Yes they absolutely do! Many projects I've been involved with, particularly the case with consultancy based organisations, have provided detailed tenders to clients. These documents have budgeting details, and delivery timescales. Failure to deliver in line with this would often incur liquidated damages.

That is unusual.   I have never seen a quote from any business that tells me much about their liability insurance, what their software costs are, the staff wages etc.   Materials and goods yes plus labour but never a breakdown beyond that.

jimi_man

I think the main issue is one of transparency. If you ask the garage to do a clutch change on your car then they'll said 'the book says it's xx hours of labour and we charge xx per hour, and then the  parts are xx'. That gives you an idea and it's up to you whether you want to shop around.

With Financial services the costs (I imagine) are a little more nebulous. However they do themselves no favours by saying 'around £5k' without any suggestion as to how this is broken down and it all leads to the feeling that it's just been plucked out of the air. A little more transparency along the lines of 'we charge a percentage/a flat fee of xx plus xx' or any combination. That makes it a little easier to compare costs when shopping around. 

LV_426

dunstonh said:

Yes they absolutely do! Many projects I've been involved with, particularly the case with consultancy based organisations, have provided detailed tenders to clients. These documents have budgeting details, and delivery timescales. Failure to deliver in line with this would often incur liquidated damages.

That is unusual.   I have never seen a quote from any business that tells me much about their liability insurance, what their software costs are, the staff wages etc.   Materials and goods yes plus labour but never a breakdown beyond that.

Fair enough, we're in completely different industries. But the question was asked, and I answered it from my perspective.

dunstonh

With Financial services the costs (I imagine) are a little more nebulous. However they do themselves no favours by saying 'around £5k' without any suggestion as to how this is broken down and it all leads to the feeling that it's just been plucked out of the air. 

All firms are required to have a tariff.  The fee should match that tariff.     However, some advice requirements don't fit the tariff as you cannot put every single job type on it.  

A little more transparency along the lines of 'we charge a percentage/a flat fee of xx plus xx' or any combination. That makes it a little easier to compare costs when shopping around. 

That is exactly how it should be.   That is the norm.       


It cannot be "it will cost £xyz because I have to pay 6 staff members their salary of £xxxx,   The FCA levies of £xxxx,   The liability insurance of £xxxx, plus the dozen different software companies each month £xxxx and the heating and lighting, office furniture, PCs etc.".  I do not know of any industry that breaks down its service charges that way.      The typical is to give the cost for the job when it comes to service industries.

BritishInvestor

dunstonh said:

While Unbiased is not ideal, the typical adviser profile on there is pretty average, tending to talk about:
1. Themselves (zzzz)
2. Investments (zzzz)

How on earth can you differentiate based on these profiles?

The unpaid profiles give you virtually no choice.  The paid profiles have more customisation possible.

The FCA treat directory listings as a financial promotion.  So, all the regulatory text needs to be present and wording needs to be compliant.

If they instead focused on exactly the type of people they help (e.g those planning to retire in the next 5 years), I reckon they'd get a lot more traction and people getting in touch directly. 

A general practitioner IFA will help everybody.  Wealth manger FA/IFAs will often be focused on larger investors.   Some business models may focus on a type but most do not.

I just did a unbiased search using our postcode.   We didnt come up at all and I cant see a place to show the non paying adviser firms.   The first and second advisers were not actually based locally.  Both were national firms that pay to appear at or near the top in every search and have travelling advisers.   The third says "new adviser" but it isnt.  His firm has been going for over two decades.  What it really means is that he is not buying leads from unbiased.  Then there were two regional firms.  After that, the distance was far away and plenty of FAs (not IFAs) appeared on the list.   

Apart from one firm, the rest were mostly salesforces.   Only one of the general practitioner local IFA firms appeared and he isn't buying their leads.    None of the rest of the local independent IFA firms appeared. (by independent IFA, I mean not a salesforce or appointed rep of a network but independently owned IFA firms)

Twenty years ago, the list would not have had the salesforces and every IFA would have been on there.

"The unpaid profiles give you virtually no choice. "
"We didnt come up at all all"

I don't believe the unpaid profiles show up in the listings we are discussing. They might appear on a Google search.

"The FCA treat directory listings as a financial promotion.  So, all the regulatory text needs to be present and wording needs to be compliant."

Yep, but that's different from discussing who you work best with.

"Some business models may focus on a type but most do not."

If you look over in the States (they are way ahead of us) there appears to be far more of a focus on niches/specialisms

https://www.wealthmanagement.com/industry/niche-advisors-grow-faster

"Both were national firms that pay to appear at or near the top in every search."

Flying Colors and TPO at a guess

"A general practitioner IFA will help everybody.  "

But if you want specialist advice (for example around retirement planning), would you want to work with a specialist or a generalist?

"Twenty years ago, the list would not have had the salesforces and every IFA would have been on there."

I'm not sure what the solution is TBH. Unbiased have to make money, and I'm assuming cost per click/SEO competition is ever increasing. They therefore want as many advisers paying for leads to cover their costs. Adviserbook doesn't seem to have gone anywhere.