This is a thorny subject as Independent Financial Advice (IFA) firms all over the UK are at liberty to set their own charging structure. Some charge an initial set fee for preparing a report, then they charge an hourly or percentage fee based on the time spent preparing and completing the advice. Others charge a flat percentage of how much you invest others charge a pure hourly based fee. All appear to work, but as you may appreciate some may suit you better than others.
Transparency in what exactly you pay I fear is a bigger issue than what the IFA tells you on their terms and conditions of business letter.
Let me explain.
There appears to be a common thread throughout the industry that I personally don’t like. This trend is relating to how the company actually manage your money.
Once the IFA has determined which financial product is best suited to your own needs or aspirations the next step is to perform a detailed (well ours is detailed I can’t speak for anyone else’s) risk and capacity for potential loss assessment. The results of the risk profiling exercise is that the IFA will then determine what level of risk, volatility and appetite for movement in the value of your capital that you want to take. After this the IFA needs to determine the spread and mix of investment funds that are going to be needed to achieve your desired results, and this is where the problem lies. Many companies are now ‘outsourcing’ this to a platform or Discretionary third party manager.
In simple terms you pay for a third party to make the decisions on which funds your money is going to be invested into. So you end up paying for your IFA’s fee, Your Product Providers plan fee, the Discretionary Fund Managers fee and finally the fee to the management team who actually run the fund. Now as you can imagine this amounts to quite a number of mouths to feed before you get anything like a net return on your investment. Where FSC Investment Services Limited differ is that we have chosen to employ our own internal Research and fund advisory team who are responsible for selecting and managing your funds directly. This cuts out the extra cost of the third party managers, we also in many cases negotiate discounts with the product providers and direct fund management houses which will result in lower costs and greater potential for you to make money if two identical portfolios are matched head to head.
We are immensely proud of the fact that due to our way of doing things each and every client has a bespoke portfolio which has been hand selected for them and them alone, this ensures a perfect match initially to the clients risk analysis profile, which is regularly reviewed. The Discretionary or platform method often results in the client being ‘pigeon holed’ into a fund that ‘closely reflects the clients attitude to risk and reward’. We are also able to demonstrate that our custom built portfolios out perform the Association of British Insurers (ABI) averages for each sector and fund group. We only choose and select our portfolio funds after intensive research and analysis and benchmarking against the best in sector funds. Our aim is that all our clients have portfolios built using best of breed funds, and these are then managed and swapped as and when market conditions change (with the clients approval).
We are so confident that our system is more economically superior to any other model currently on offer that we are willing to offer a “Price Match Guarantee’.
We will match or beat the charges on any portfolio that you may be offered by any other Qualified firm of IFA’s. All we ask is you provide us with the report from the IFA showing the full costs (ie The IFA Fee, Product Costs, and fund management charges and all other related costs), we will then provide you with our detailed report using our custom built portfolio and the costs appropriate to that investment, we will then guarantee to match or beat the charges on the other IFA’s quotation.
To test our ‘Price Match Guarantee’ please contact us on 01902 422333 or email email@example.com
Frank Cochran – Managing Director & Independent Financial Adviser
FSC Investment Services Limited.
The purpose of this article is to provide technical and generic guidance and should not be interpreted as a personal recommendation or advice. You are not certain to make money – you may suffer a loss. FSC Investment Services Limited is Authorised and Regulated by the Financial Conduct Authority.