Financial Advice is NOT free.

Retail Distribution Review (RDR for short) – a huge shift in financial services, and I for one think it is for the better.  It comes into effect in January 2013, but it’s started now.

Yesterday, I attended a RDR conference, covering subjects such as VAT, adviser charging, and positioning my proposition to my clients.  There are objectors to the change and others, like my firm – Financial Solutions Wales, who are embracing the change.  My firm is well positioned to provide advice to our clients well into the future.  Both advisers are suitably qualified to provide advice for the future, and I have gained Chartered Financial Planner status. (the Personal Finance Society describe Chartered Financial Planner as ‘the pinnacle for the financial planning professional’).

I feel more comfortable dealing with clients who understand that financial advice is not ‘free’.  Any adviser, like those at your bank, independent advisers, tied agents do not provide free advice, they must get paid!  This has traditionally been through commission, where the product provider sets the payment levels, advisers choose how much they would like from that offered by the firm he/she places the business with.  I like to agree all fees up front, it’s fairer to you – my client.  I met a potential client last week, who was offered a solution from another adviser, and  she was shocked to see the charge was £9000!  You won’t be surprised to understand that she asked me how much I’d charge for the same work – around a quarter of what she was quoted by the other adviser, agreed up front with our firm, delivering a proposition to meet her needs now and in the future.

As an independent financial adviser (IFA) I offer a professional service to my clients, often matching their needs with solutions available.  I have calculated the amount of time spent on providing advice is around 10 hours on average.  My clients see me for around 1/4 of that time, usually an initial meeting and then when I provide my recommendation.  Often, to ensure that they are comfortable with my recommendation, we may add another meeting or two.  ‘Behind the scenes’, I prepare for appointments, telephone providers, design solutions, research products, complete applications and follow up the application until it is in place.

This takes a considerable amount of time.

I must say that I agree that some people will be priced out of taking advice, because as I say before, it is rarely ‘free’.  However, I look forward to taking on those clients who value my services, and feel content with the solutions I provide.