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From £50 to £2,500: huge variation in financial advice fees exposed

Consumer group Which? has found the fees financial advisers charge for their services varies wildly across the country.

From £50 to £2,500: huge variation in financial advice fees exposed

The price of financial advice varies wildly across the country, with consumers in some areas being charged thousands of pounds more than others for the same service.

A survey of 200 independent financial advisers (IFAs) by consumer group Which? found the average price to transfer a £10,680 investment into a stocks and shares individual savings account (ISA) was £356. However, one adviser in the South East quoted £2,500 and two IFAs in the South West and East of England quoted just £106.

Quotes for arranging a protection policy for a 30-year-old woman also varied widely. An IFA in the North West quoted almost £2,000 to arrange the policy, almost four times the average quote of £596.

Service provided Highest fee quoted (£) Lowest fee quoted (£) Average fee quoted (£)
Transfer £5,000 into stakeholder pension 2,500 50 322
Transfer £10,680 into stocks and shares ISA 2,500 106 356
Arrange term assurance policy of £100,000 for 40-year-old male 1,500 155 519
Arrange income protection for 30 year old female 2,100 120 596

Advisers are free to charge whatever fee they choose for their services as there is no approved list of typical charges against which consumers can compare fees quoted to them. Which? is now calling for a IFAs to publish a rate guide on their website to ensure easy comparison.

New regulations to be introduced at the end of the year will ban IFAs from taking commission and force them to disclose the cost of their advice.

Which? chief executive Peter Vicary-Smith (pictured above) said: ‘Financial advisers should be much more transparent in their pricing, providing details of all their charges upfront. At present it’s difficult for customers to know how much they’re going to be charged, and what is reasonable.

‘IFAs should clearly display their fees online and if they don’t the regulator should step in and make this happen,’ Vicary-Smith said.

How to find a good financial adviser:

If you need to find an IFA in your area visit the Citywire Money Adviser Finder. Our Adviser Finder tool lists the IFAs in your area that have moved towards a transparent way of charging by ditching commission, and showing commitment to their customers by increasing their level of qualification beyond the required benchmark.

IFAs gain entry into Adviser Finder by invitation only so you know you can trust they are running professional, customer-focused businesses.

3 comments so far. Why not have your say?


Jan 16, 2012 at 14:27

It is called catch as catch can.

Or as a Greek proverb says, I blind you and sell, you see and buy.

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Jan 16, 2012 at 15:35

Same old story regularly prop up about greedy financial yobos feeding on the less sophisticated investors. Due to our incompetent regulators this sort of rip-off is just normal.

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Ian Hawkes

Jan 16, 2012 at 17:08

No-one in their right mind would pay £2,500 to transfer £5,000 of pension rights... which is entirely why some firms choose to charge such minimum figures: they don't WANT that business. Rather than simply imposing minimum business volumes (which may eliminate good leads where multiple small projects are required), they deliberately price themselves out of the market by setting a minimum fee for their services.

I'd be surprised if anyone out there had actually chosen to pay that fee. It would be extremely abnormal for someone to be "ripped off" by actually paying even close to the quote due to the free market: consumers are generally savvy enough to shop around a little before agreeing to the first offer they see.

This isn't an area the regulators should have anything to do with. Businesses are entitled to set their own fees just as consumers are entitled to take their business elsewhere.

I'd be very interested to see the indicative fee of the same firms for £100,000 of business rather than £5,000.

I'd also like to know how any adviser can carry out a pension transfer for £50 and stay in business. Given the regulatory requirements and the permanent financial accountability, it's just not worth doing that sort of work for such a low fee. I can only assume that it's an execution-only firm charging little more than a nominal fee and hoping for volume business.

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