Financial adviser fees: is it worth trying to get them back if they did not provide any services?

HassledLondoner

My wife and I signed an agreement with a financial adviser in mid-2014 including an upfront fee (c.1%) and an annual fee comprising about 1.3% of our portfolio, which he put on what is now the Standard Life Elevate platform. The services he was meant to provide, if I recall rightly, included general financial advice on pensions etc and regular meetings to explain options. In the first 2-3 years he did come round to our house for several meetings. After that he barely answered emails, often not at all. My wife repeatedly asked him for advice on an optional pension merger through her work and he did not reply in time. One year we filled out the risk assessment form and got no reply. One year he missed using my ISA allowance. In person, he is very nice so we have been loathe to act or complain. Today we have written to him saying we want to stop using him. Our portfolio, over the 8 years, has averaged at about a 3% annual gain after all charges and fees, so barely keeping up with inflation, but we can't say he has actively lost us money with bad decisions. As far as I can see he  put all the money in about three funds years ago and has done nothing but sit there and take our fees. My question is whether we could have a viable case for return of some of the fees charged on the basis that he has not provided the services he should? And whether there are decent lawyers who would undertake this on a no win, no fee basis?

dunstonh

My wife and I signed an agreement with a financial adviser in mid-2014 including an upfront fee (c.1%) and an annual fee comprising about 1.3% of our portfolio, which he put on what is now the Standard Life Elevate platform. 

1.3% is above the typical range for an adviser and more typical of the bottom line of all charges.  Elevate's charge is 0.3% under £150k or 0.25% over.   The fund charges are likely to be between 0.2% and 1%.  The adviser charge is likely between zero and 1%

My question is whether we could have a viable case for return of some of the fees charged on the basis that he has not provided the services he should? 

An adviser has to carry out the services that are agreed in your fee agreement.     If the services have not been carried out, then you can request a refund of the adviser charge taken over that year.   

However, prior to 2018, services were not required to be annually.  People with smaller amounts could have their services provided over 2 or 3 years It was only from 2018 that services were required to be "at least annually".

So, you are possibly looking at the last three years plus YTD.  Although not changing funds is not an indication of services provided.   Checking they are suitable and recommending no change as they pass due diligence and meet the objective is a service being carried out.  If the funds were being changed too often, then that would be more worrying.

That assumes there is an ongoing charge at all and the cases were not arranged on a transactional basis. (you cannot claim back an adviser charge if no adviser charge is being taken and advisers will not service transactional cases unless asked to do so by you).

And whether there are decent lawyers who would undertake this on a no win, no fee basis?

That would be rather pointless as the regulated complaints process is free of charge to use and the financial firm is not required to pay any fees you generate by using a third party.

You haven't said what the adviser charge is but let's say it was £700 a year (it won't be the same each year but for this example, let's assume it is).   As the rules changed to at least annually in 2018 and you say the funds were changed three years ago, let's say there were two years where no services were provided then you could ask for £1,400 back.  A lawyer (sic) would likely cost you more than that.   Whereas you asking the adviser for the money back for years no service was provided is free of charge to you.

Albermarle

Our portfolio, over the 8 years, has averaged at about a 3% annual gain after all charges and fees,

The return from a portfolio is mainly affected by two issues

1) How the portfolio is positioned in terms of risk . An aggressive higher risk portfolio will tend to grow a lot in the good times and go down a lot in more difficult times . A cautiously invested portfolio will be more stable/grow less. What did you agree with this IFA for your level of risk tolerance ?

2) How financial markets have behaved in the relevant period. Over the last 8 years they have done rather well ( with a few ups and downs) 

Without knowing the details it is difficult to comment, but 3% pa over the last 8 years would be a disappointing result for most investors.