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AWD alters fee structure while rivals stick to tiers

by Jun Merrett on Jan 22, 2013 at 08:02

AWD alters fee structure while rivals stick to tiers

AWD Chase de Vere has bucked the trend for national advice firms by altering its adviser charging structure in the retail distribution review world.

In contrast to most of its competitors, AWD has changed its fee structure and will charge clients 3% for initial investments. Previously its advisers were allowed to charge up to 5%. AWD’s ongoing advice will cost a client 1% of assets a year.

Rival nationals Towry, Skipton Financial Services, Close Brothers Asset Management, and Foster Denovo will retain a tiered structure for initial investment.

Towry charges 1.5% initial for portfolios up to £250,000, and 1% for assets above this. Skipton clients with up to £150,000 will be charged 4.5%, going down to 0.5% for assets above £750,000.

For a client’s first £250,000, Close charges 3%, dropping in tiers to 1% for amounts higher than £500,000. Foster Denovo’s charges range from 3% to 0.5%, depending on a portfolio’s complexity.

Patrick Connolly, AWD head of communications, said the firm had standardised its initial fees due to adviser demand.

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21 comments so far. Why not have your say?

bob via mobile

Jan 22, 2013 at 09:10

All these sales companys have simply name changed commission to 'fee'

I thought RDR was about paying for advice ? The above RDR models still put the emphasis and pressure of a sale on the adviser. Even some of the Banks have steered clear of this namely RBS (NatWest) and HSBC charge for advice and then apply a set up fee if client wants to proceed with advice.

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Jimmy via mobile

Jan 22, 2013 at 09:12

At 3 + 1 its a great deal for the client

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Ric Green

Jan 22, 2013 at 09:25

3% and 1% - that is truely ground breaking stuff.

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Man of Kent

Jan 22, 2013 at 09:46

or rather 3% + 1% + 1% + 1% + 1% + 1%, etc., etc.

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Confused

Jan 22, 2013 at 09:48

But Bob - this is RDR!

Standard Life changed the Commission Statement to the Adviser Statement. Hep! RDR friendly!

All RDR means at this stage is a rebranding, nothing has changed. But the long term impact of removing adviser fees as a cost to investment, thereby resulting in tax charges to pay the 1% will have a bigger impact, and VAT of course, will be much greater than the banning of commission.

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Shavian

Jan 22, 2013 at 09:50

The Telegraph has published numerous articles warning its clients to be wary of higher adviser charging fees post-RDR. Who has the Telegraph partnered with for its various referral services? Skipton - that's who. 4.5% up front for small investors up to £150k? I wonder how muck of that goes back to The Telegraph?

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Shavian

Jan 22, 2013 at 09:52

Edit: I meant 'much', not 'muck', but perhaps muck sounds better in this case!

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Don't believe MP's or journalists via mobile

Jan 22, 2013 at 09:55

@ Bob: Having met and spoken with an AWD adviser, I understand that the fee is not dependent upon the sale of a product. It's an advice charge.

And, like with some other firms, becomes due whether or not the client instructs the advice to be implemented. Enforcable by clause in the client fee agreement. So get it signed in advance of spending any time on research and recommendations.

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Usually found sitting on the fence

Jan 22, 2013 at 09:56

Surely RDR is about paying for the advice you get and not about the amount of money the client is placing? While some adjustment is needed to cater for increased risk the adviser takes on, surely if 2 clients walk through the door, say husband and wife, they are the same age and have the same appetite for risk. One has £100,000 and the other £200,000. The advice given is to invest, for both, evenly split between 10 funds. One pays £3,000 and the other £6,000, does the additional £100,000 justify the additional £3,000 charge? It took the adviser the same amount of time, therefore the risk of the additional monies does not equal that amount.

For RDR to have been truly ground breaking and more client friendly, investment advice should be fee based + small ongoing amounts allowed, while protection advice should have continued as is on a commission basis, allowing the provider to remunerate the adviser.

As bob says, it's just commission in different clothes, with an added client opt out which could lead to more and more small claims disputes where the adviser tries to recover their charges (stress could)...

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Hickky

Jan 22, 2013 at 09:58

Towry charges 1.5% plus advice fee of often £2,000. Charges on their in-house funds are often 2% plus. Restricted advice makes advisers specialists? Specialists in charging clients more like.

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Hickky

Jan 22, 2013 at 10:01

p.s. Towry also want to charge clients £500 p.a. as a retainer, allowing clients three hours of telephone conversation with administrator or adviser. Don't know how many have signed up though!

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Ian T Coley

Jan 22, 2013 at 10:08

What's the problem?

Market forces will set the levels and firms who overcharge without providing value will soon discover they are going to struggle.

As log as the fee scale are clear and inclusive then they can try and charge whatever they want. If they are deluded enough to think they provide value then so much the better.

If they do provide value that the clients appreciate then good luck.

Ian Coley

Partner

Medical Investment Services

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Ewart Matthias

Jan 22, 2013 at 10:09

@Bob

Exactly why RDR is a waste of time . All it will mean is increased costs to firms, advisers and client, crazy.

I hope those who defended it will now see that it was and is a mistake.

Ah we'll the FCA review will no doubt highlight this and change it all again at great cost to all concerned, except those at the FCA of course and you wonder why many of us have said enough is enough.

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david mann

Jan 22, 2013 at 10:12

flat fees such as these are ridiculous and fly in the face of RDR separating advice from product -

so one client just sold a business and he has £3m in cash to invest. - flat % based on asset size.

another has £80,000 across 6 small pension pots, some with GARs, with profits bonus rates, loyalty bonuses,S32 plan and wants to go into drawdown - flat % based on assets.

its nuts and will lead to massive conflict and cross subsidy - err, just like the commission it has replaced.

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Tracey

Jan 22, 2013 at 10:22

@ Don't believe MP's or journalists

That is not how it works, AWD will NOT be charging 3% for the advice only. The 3% , as before, will be for implementing the advice i.e. selling the product but they will call it an Advisory Charge given the skewed language of RDR.

So the 3% is dependent on a product sale - nothing changed, they have simply standardised their terms

Also, you got to love Mr Connolly, the change was becasue of ADVISER demand , nothing to do with CLIENT demand !

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Soothsayer

Jan 22, 2013 at 10:31

If not through a percentage charge against assets (and I accept that the increase in risk is not perfectly linear), how are advisory firms to reflect higher P.I. costs caused by larger pieces of business/higher risk business ?

Further, is it not true that the FSA/FSCS charge us all on a %age basis ?

Quite wrong about cross-subsidy given the above, assuming strict minima are in place, with regard to the fee levels at the bottom end and a defined, clear service proposition of varying levels.

We really should stop this ridiculous mud-slinging. No one has actually compared the respective propositions, what is actually recevied for any given initial and ongoing fee.

There are only two national firms in the top ten who are independent and they are not the firms with the highest level charge.

Those whose choose to sling mud at everyone else (seemingly without discrimination) should "calm down dear". There is plenty of business for all, and the consumer will decide what represents good value.

Now back to work everyone !

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Alex

Jan 22, 2013 at 11:25

I think some of us miss a vital point in this. The advantage to paying a flat % based/fiixed charge(because that is what this is!) is that the client will know exactly what he/she will be paying as oposed to hourly/time costed charges which can quickly escalate and are uncapped. The choice of course is up to the client but i know which one I'd rather pay!!

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Christopher Petrie

Jan 22, 2013 at 13:40

Our Client Agreement offers both options - % or Hourly Rate.

Thus far, not a single client has asked for the Hourly Rate option.

I still can't see what the "issues" are with RDR...clients have the choice of payment, and we respond accordingly.

The only losers seem to be the banks that appear suddenly afraid to charge a 6% fee (most have reduced it to 3% or less), presumably because they can no longer hide that behind the old allocation rate/establishment fee/early penalty charges trick that they used to disguise the effect of 6% commission.

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Mike Hardy

Jan 22, 2013 at 13:43

Dont get me wrong I think the RDR is an utter waste of time and money but (as I understand it) one of the aims was to stop product providers from being able to influence the market place but offering very high levels of commission for specific product types. To this extent it might actually work. All the fees quoted above will apply regardless of what product is purchased, so I would have thought.

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Super Moses via mobile

Jan 22, 2013 at 20:28

These charges are great, they have provided me with even more ammunition to shoot down the usage of the nationals. I can't believe anyone still gets away with charging anywhere near 4 or 5%.

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Dynamike

Jan 26, 2013 at 10:24

What a mess!!

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