A survey of advisers by Copia Capital Management [Copia] reveals that one in six (16%) of advice firms polled expect the Consumer Duty value for money rules to lead to an increase in the total charges clients pay. Almost two-fifths (38%) believe they will have no impact, while a fifth (22%) expect to see a reduction in some or all fees.
The poll of 116 advisers was part of a webinar on the value for money assessment requirement of Consumer Duty with Copia’s Managing Director, Robert Vaudry, and the lang cat’s Consulting Director, Mike Barrett. The poll findings show considerable change in adviser sentiment since the lang cat asked the same question in its State of the Adviser Nation research last October. Back then, almost two-thirds (64%) thought the rules would have no impact, a fifth (18%) of firms thought they would lead to a reduction in some or all fees and just one in fifty (2%) expected an increase in overall charges.
During the webinar, Robert confirmed that the poll’s findings tally with his own conversations with advice firms: “In recent meetings with advisers, several firms currently charging clients less than 1% say they are now considering putting their fees up – either increasing the absolute fee or raising the asset thresholds where fees decrease.
This may have been something they were thinking about anyway to reflect the rising cost of living, but we’re also hearing that through the requirements of Consumer Duty firms have a better understanding of the cost of the services they provide and the value they are delivering for clients, giving them an opportunity to re-evaluate their charges. As a result, I think we could see the cost of advice increase marginally.”
Answering an adviser question about how firms can justify charging the same percentage fee for clients with very different assets under management within the Consumer Duty value for money assessment, Mike Barrett reminded advisers to consider the needs of each client.
“Almost certainly someone with £3,000,000 to invest will have more complexity from a planning and investment management point of view than someone with £30,000. However just charging a blanket percentage without considering the client need, especially if you have very high net worth clients, will be poor practice. There is likely to come a point where the Consumer Duty assessment process will shine a light on the cost of delivering these services. You might need to cap your fees for high net worth clients, while at the other end of the scale, you could find that those with lower assets just aren’t going to get good value for money from the fees you need to charge.”
The webinar coincided with the addition of a guide and template within Copia’s Consumer Duty Toolkit to help advisers complete their value for money assessments. The Toolkit is a free online resource for advisers including guides, videos and templates, and new material is being released regularly, in line with the implementation timetable. Advisers can register for the Toolkit at: https://www.copia-capital.co.uk/consumer-duty-toolkit/.
A recording for the webinar can be accessed at: https://vimeo.com/819471201/0d669383b8?share=copy
