Why is the cost of advice so high?

BritishInvestor

ajfielden said:

wjr4 said:

Retirement planning is not specialist advice at all. Specialist advice would be complicated tax and trust issues, pensions and divorce, long term care planning. Most other needs are covered by any financial adviser. 

I agree. The questions I'm asking are fairly simple, my finances are unique to me, but not that complex. Any IFA doing pensions advice will have seen it all before.

But investments (and their potential consolidation) is only 10-20% of the effort involved in a typical retirement planning exercise (IMO), so if that's all you are looking for, you should be able to get it far cheaper than the figures you are quoting. 

LV_426

Ciprico said:

To get back to the original post, it is not difficult consolidating DC pensions, really just a matter of filling in a few forms.

Some research is required to pick the most appropriate platform, establishing your risk level and buying corresponding funds, but it is not rocket science...

There is plenty on advice on this forum for both.....

Probably. But this is the first time in my life I've had to deal with this situation, and someone in the financial advice business has seen it all before and knows what they are doing.

It's like me asking someone to code up a website having never done it before. Yes they could probably cobble something together, but would it be optimal. Probably not.

There's really no rush though. Either I piece together a reasonable picture myself, and I'm picking up nuggets of good information all the time, or I decide to engage with a suitable advisor, who's willing to work with me as I want, at the right price.

Prism

ajfielden said:

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.

I work in IT. On the face of it I get charged out at around £2-3k per day but that covers a wide range of supporting services including a sales process, content, travel and taxes. Nobody asks for a breakdown nor would get one. 

LV_426

BritishInvestor said:

ajfielden said:

wjr4 said:

Retirement planning is not specialist advice at all. Specialist advice would be complicated tax and trust issues, pensions and divorce, long term care planning. Most other needs are covered by any financial adviser. 

I agree. The questions I'm asking are fairly simple, my finances are unique to me, but not that complex. Any IFA doing pensions advice will have seen it all before.

But investments (and their potential consolidation) is only 10-20% of the effort involved in a typical retirement planning exercise (IMO), so if that's all you are looking for, you should be able to get it far cheaper than the figures you are quoting. 

Very true.

LV_426

Prism said:

ajfielden said:

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.

I work in IT. On the face of it I get charged out at around £2-3k per day but that covers a wide range of supporting services including a sales process, content, travel and taxes. Nobody asks for a breakdown nor would get one. 

Well that's great. Are you freelance or do you work for a consultancy? And are you doing project work? Most government and commercial contracts have a tendering process, and the big players respond to it by submitting official tenders. This has been the case in all the big consultancy companies I've worked for in the past.

Prism

ajfielden said:

Prism said:

ajfielden said:

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.

I work in IT. On the face of it I get charged out at around £2-3k per day but that covers a wide range of supporting services including a sales process, content, travel and taxes. Nobody asks for a breakdown nor would get one. 

Well that's great. Are you freelance or do you work for a consultancy? And are you doing project work? Most government and commercial contracts have a tendering process, and the big players respond to it by submitting official tenders. This has been the case in all the big consultancy companies I've worked for in the past.

I am doing all of the work on the day but it doesn't take into account all of the background costs required to make that happen. The end customers are both big and small businesses plus government of all sizes. I guess one major difference is the total amount. At the level of let's say £15k a week they do not seem to want any more breakdown of costs. They don't know how much my daily costs are of a cut of that total - all they want is how much it costs for their desired outcomes

its IT training and consultancy

Thrugelmir

BritishInvestor said:

Thrugelmir said:

BritishInvestor said:

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.

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

When it comes to transacting business the US is so very different. The much quoted proponent of SWR in the US charges their clients a minimum of 1% of portfolio value. Nothing comes for free in this world. 

"The much quoted proponent of SWR in the US charges their clients a minimum of 1% of portfolio value"

As do many in the UK, but I would agree fees tend to be higher across the pond. 

There aren't that many over here following the processes discussed in books such as this

https://www.amazon.co.uk/Delivering-Massive-Value-Profitable-Hyper-Efficient-ebook/dp/B09F3Y7FGF/ref=sr_1_1?keywords=matthew+jarvis&qid=1638888468&sr=8-1

(but it could well be the case that there is a huge number of US advisers that also aren't following his methods).

As no data is published for peer review.  Any discussion will remain subjective. Needless to say mantra's will continue. Until there's something better for investors to hang their hats on. 

SouthCoastBoy

Does 5k example of the IFA quote the number of hours and also if asked a breakdown of what work will be completed in those hours? Not a justification of the hourly rate, that is entirely discretionary, but I don't think it is unreasonable for the IFA  to give a breakdown of the work being executed during the hours billed for. 

wjr4

Ciprico said:

To get back to the original post, it is not difficult consolidating DC pensions, really just a matter of filling in a few forms.

Some research is required to pick the most appropriate platform, establishing your risk level and buying corresponding funds, but it is not rocket science...

There is plenty on advice on this forum for both.....

What about any underlying guarantees, protected things etc. Where would they know where to invest? Advisers tend not to just sell pensions and investments now, a lot actually care about the person’s life and ensuring the advice is correct for the rest of their life. 

You’d be surprised at the amount of people who initially tell me they do not want cash flow planning but once I show them, it changes their mind as it makes them understand their finances more. 

What about IHT and estate planning? Seeing an adviser should be about the bigger picture, not just moving one pension to another pension. 

Secret2ndAccount

Prism said:
I work in IT. On the face of it I get charged out at around £2-3k per day but that covers a wide range of supporting services including a sales process, content, travel and taxes. Nobody asks for a breakdown nor would get one. 

...
 I am doing all of the work on the day but it doesn't take into account all of the background costs required to make that happen. The end customers are both big and small businesses plus government of all sizes. I guess one major difference is the total amount. At the level of let's say £15k a week they do not seem to want any more breakdown of costs. They don't know how much my daily costs are of a cut of that total - all they want is how much it costs for their desired outcomes

its IT training and consultancy

I used to work for a small part of a large company. When we did work for other parts of the company, we quoted a price, and they could take it or leave it. When we worked for the government we were required to break down our quote, telling them how many hours we were charging, what the hourly rate was, what the overhead rate was, and how much profit we were making.
I believe if either kind of customer wanted to know more we would have been prepared to meet with them - not necessarily to throw open our books, but to be open about how we arrived at our quote. We found that the more time we spent with our customers, the more they got to know us, the more they trusted us, and believed in the quality of our work. We could also pick up tidbits about what our competitors were offering which might help us make a better quote for both sides next time.