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Financial advisers have nothing to fear from fee transparency

Hand holding transparent glass

Independent financial advisers offer a valuable service – they should have the confidence to be open about how much they charge. They’re no longer able to accept payment by commission, so why be shy about it?

Many independent financial advisers (IFAs) have long envied the professional esteem afforded to their counterparts in the legal and accountancy trades. Lawyers will always win in the glamour stakes – it’s difficult to imagine a Law and Order-style TV drama about a firm of maverick IFAs.

But new rules governing advice, known as the Retail Distribution Review (RDR), will help to cement ‘independence’ as the gold standard, with professional qualifications to match.

Cut out commission

A key aspect of the RDR is that financial advisers must clearly explain how much their advice costs, how you’re paying for it and what you’re getting in return. They’re no longer able to accept payment by commission.

This is good news, because commissions allowed unscrupulous advisers working in banks to give the impression their service was free when it wasn’t. But IFAs will struggle to win over those who are suspicious of financial professionals if they fail to live up to expected standards of transparency.

Upfront fees for financial advice

A review of the RDR’s implementation by the regulator has found that while some firms are providing their charging structure to clients in advance of their first meeting, others are waiting until they already have you in their office to reveal the cost of advice. The study even found one firm that won’t explain how much it charges until a second meeting.

IFAs offer a valuable service for those who lack the time, knowledge or confidence to make big financial decisions, but they shouldn’t shy away from transparency. Advisers should give example costs for advice during initial phone calls and on their websites – that way consumers are in the best possible position to shop around.


The implicit assumption in all these discussions is that all IFAs are created equal. No doubt all have the basic competence acquired by passing exams and gaining the necessary time. However, they are not going to be equally competent. The same issue applies in all professions but i do not see a strong professional body enforcing standards of competence. How does one choose a financial advisor? Charges are one consideration. Competence and trust are equally if not more important.

Do financial advisors have to by law put their charges on a client’s portfolio. The report is dated ‘report version 14th April 2014’ although it is dated as being written up as 14/12/2016 by the company this FA is employed by, as a Consultant what ever that means.