Financial Advisors , To charge or not to Charge?

[NorthDrum]

Just wondering what financial advisers think of this. . .

I know that PIBA are pushing the idea that Brokers start charging an initial fee (lets say €100) for several reasons. Obviously there are pro's and con's to it, but I am still trying to decide how my company should progress. As of now we do not charge any fees (outside of comissions received from Assurance/Mortgage Companies).

Many clients have asked me how much they owe me, after I have done all the work but lets say they are declined a mortgage or life cover policy. To some professions this may seem crazy, but this is the reality of life for financial advisers.

There is a double edged sword to this. On one hand I have done the work and advised the client so it makes sense (like most advisory professions) to charge an up front charge and ongoing financial advice charge. Also it can give clients a feeling of quality service (instead of saying, we receive payment from the insurance companies) as opposed to "free advice" that it might feel like. One would hope following on from this financial advisers would eventually be a respected valued profession on a par with other financial services.

On the flipside it can be difficult enough to enhance brokers public perception without charging them more (particularly in the current economic climate. While I feel it would add more weight to Financial Advisors importance in the financial services sector, it may also give Larger companies (Assurance/Mortgage) the opportunity to exploit this by saying to people that they can save money coming direct to them. (at the moment SAVING MONEY is the most important thing in the general publics mind).

 

[BetterBiz]

Hi Northdrum, I'm not a financial advisor however from a customer perspective I would always seek out a broker that charges a fee for the advice and is not getting a commission for pushing a certain product.

I think the brokers that operate in this way and then refund any commissions payable on the product sale back to the customer are probably the best positioned.

So you charge a fee for the advice and then refund any commissions (in full) back to the customer. This seems the fairest and most transparent all round.

 

[NorthDrum]

Hi Northdrum, I'm not a financial advisor however from a customer perspective I would always seek out a broker that charges a fee for the advice and is not getting a commission for pushing a certain product.

I think the brokers that operate in this way and then refund any commissions payable on the product sale back to the customer are probably the best positioned.

So you charge a fee for the advice and then refund any commissions (in full) back to the customer. This seems the fairest and most transparent all round.

Hi BetterBiz,

Thanks for the reply. Yeh I know what you are saying, Ideally financial advisors would have fees (like other professional services) with no comission payable thereafter, believe me when I say most of us would love that. Sometimes I do an awful lot of work with little or no financial reward . .

What I would say is that Comission generally (if ever) doesnt effect the price a person pays for certain products.

If anything if you walk in off the street you could potentially end up paying more for a product then by going through a financial adviser as F.A's can get better deals off their affiliated companies & companies normally dont reduce premiums/quotes just because you go straight to them. Whether comission is payable on policies taken through F.A's or not, the companies will of had this factored into the cost of the policy in the first place.

I think that the day when certain advisers chose certain companies soley for comission purposes is gone or nearly gone. Tied Agents can only sell from the company they are tied to (like the salespeople in banks) whereas Financial Advisors normally have several agencies with differant companies so they can negotiate better deals for the clients and get the best deals for them (and most F.A's are good hard working professionals that work off the idea that the better the quality of service and the better the deal for their client, the more refferals they will get).

You see I agree with your idea in principle, but its just difficult to know where to start when discussing the changing of charges.

If I was to say to you that you can either pay me €500 up front fee for certain services/advice or you could spread it out in the cost of a policy over x years where you practically wouldnt notice it, it sort of puts the situation into context.