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Sat at home on Saturday morning I read an article explaining that Which? had surveyed 500 IFA websites and found that the vast majority gave little or no information about fees and charges.
“No surprise there” I thought, after all I wrote an article a few weeks ago outlining the 12 things advisers must include on their website and fees / charges was not one of them.
I then took to Twitter, asking the question “Should advisers include their fees and charges on their website?” 48 hours later, as I sit down to write this article, the debate rumbles on.
It’ll come to no surprise to anyone who knows him, that some of the most interesting comments came from Chris Budd. He’s already published his thoughts on here and having listened to a range of opinions from advisers, commentators and ‘gurus’, I thought I’d take up the baton to try and summarise the pros and cons of advisers publishing fees on their website.
Pros
Publishing fees and charges certainly demonstrates a greater degree of openness and transparency. If you choose to do so, it proves you are prepared to go beyond what is required by the regulator. However, the information you provide must go hand in hand with an effective website, which gives a clear explanation of your value proposition, whilst doing those two other crucial things, reducing anxiety and building credibility (see my last blog for an explanation)
In my opinion, too few adviser websites clearly define their value proposition, being forced to do so, to go hand in hand with the fee disclosure, would be a positive additional benefit.
People looking for financial advice could use the fees and charges information as an additional filter, whilst compiling their shortlist of advisers to meet with
As the majority of advisers don’t publish their fees and charges, doing so would then set you apart from your peers; it could be a real differentiator between advisers
The publishing of fees and charges may naturally act as a filter. To put it crudely, if you quote an hourly rate of say £250 per hour, you are unlikely to be contacted by someone with a very modest pension fund
Cons
If there is no standardised format for disclosing fees online, we are bound to see, from a minority, an online battle to dress up reality as something more attractive. We’ve already seen this with the disclosure of regulatory status, which by the way, I firmly believe should be mandatorily disclosed online. Does anyone know what ‘restricted plus’ means?
Without careful consideration the information given could potentially be misleading. For example, it is relatively easy for a firm which charges an initial fee, based on a percentage of the assets invested, to disclose the amount they charge and the services delivered. But is it so easy for a practice charging hourly rates, which vary between adviser, Paraplanner and administrator? How would this firm take into account the number of hours needed to deliver a piece of advice, before talking to the potential client and scoping out what is required?
Clearly the more accurate the estimation of cost the better. Is a delay in providing this information until the first conversation, whether face to face or over the phone, to achieve this accuracy sensible, rather than giving potentially misleading information online?
There could be a risk that potential clients give cost a disproportionate weighting, over other potentially more important factors such as value for money, knowledge & experience, adviser compatibility, when making their choice
I’ve written before that an adviser’s website has one job (in the context of creating new client enquiries) and that is to turn a website visitor into an enquirer. I wonder if there’s a possibility that declaring fees on a website will put potential clients off making an enquiry or indeed push them into the hands of an unscrupulous adviser who initially quotes a low fee, only for these to rise significantly in the future
It seems to have been overlooked that advisers often give free guidance during initial meetings, which are usually held at no monetary cost to the potential client. I wouldn’t like to hazard a guess at the ratio, but I’m sure advisers often see a potential client who turns out isn’t right to engage the adviser, but leaves with a far better idea of how to organise their finances to achieve their aims.
It is possible that advisers putting fees on their website would deter many of these people from even making contact with us.
Since Saturday morning I’ve spent a considerable amount of time thinking of the pros and cons of advisers including fees and charges on their website and I’ve still not reached a definitive conclusion
Perhaps unusually for me (and our profession!) I’m genuinely on the fence. I can see some very definite pros, but also practical obstacles to this being implemented effectively.
What I do know however, is that if that if you do decide to include this information on your website it needs to be well presented, alongside a clearly explained and defined value proposition and the results of the experiment monitored closely.