Seeking financial planning advice? Be cautious of financial advisers who charge for an initial meeting and those who are not upfront about fees from the outset, warns the UK division of one of the world’s largest independent financial advisory organisations.
deVere United Kingdom’s warnings follow a recent undercover Which? investigation that revealed that – despite the Retail Distribution Review (RDR), which came into effect in January 2013 to increase transparency and industry standards – some advisers in the sector choose to "swerve the question" regarding fees.
Kevin White, head of Financial Planning, deVere United Kingdom, said: "An initial client meeting should, we believe, always be free. It is down to us as advisers to show that we can be of real value to you. If an IFA [independent financial adviser] cannot adequately demonstrate how they are able to measurably maximise, grow, and/or safeguard your wealth within a free 60-minute meeting, warning bells should be ringing.
"There is absolutely no excuse for financial advisers to – as Which? puts it – ‘swerve the question’, about how you will be charged and how much the advice will cost. Should an IFA dodge the fee issue, they are either likely not confident in themselves for being ‘worth’ the money they are charging, or they do not believe in what they are doing.
"Besides the obvious ethical reasons for being totally upfront on fees, and because RDR now demands it, we do not see the logic behind being anything less than transparent. The overwhelming majority of clients understand that financial advising is a profession and they are happy to pay for the right advice – just as they would be if they consulted with a lawyer or architect and received sound advice.
"The report finds that regrettably some advisers remain consistently vague about their fees and this is particularly alarming because it could potentially deter people from seeking professional financial advice at the very time when, due to the deepening pensions crisis, amongst other important factors, it has never been more important to do so in order to achieve your long-term goals.
"This, combined with the fact that many high street banks and financial advisers have withdrawn services for those with less than £100,000 – an unintended consequence of RDR – could force more and more middle-incomers into the potentially dangerous territory of ‘DIY investing’, where mistakes are all too common and often extremely costly."