The issue of fees and charges in the new RDR era came to the fore after the regulator delivered a scathing assessment of advisory firms – having found 73 per cent failed to provide the required information on the cost of advice.
The FCA's review has left two unnamed firms with the threat of referral to its Enforcement and Financial Crime Division hanging over them.
They were accused of "egregious failings" as part of the FCA's study, which concluded too many advisory firms were not being clear with consumers on how much advice costs, the type of service they offer, whether it is restricted and the nature of the restriction and what ongoing services they provide.
However, while a sample of advisory firms were assessed the FCA did not separate out Financial Planners as a distinct group.
Financial Planner's straw poll found planners were disclosing fees at the outset and prior to giving full advice. Planners said they go to great lengths when it comes to letting clients know about fees.
In fact, wealth managers and private banks were found to have performed poorer than other firms in nearly all aspects.
Clive Adamson, director of supervision at the FCA, said officials have seen some "positive progress and willingness by advisers to adapt to the new RDR environment" but added: "These results are a wake-up call and we expect the industry to respond."
Sean Condon, CFPCM director at Yewtree Financial Planning and chairman of IFP Essex branch, said: "The RDR is not yet 18 months old and so we still have a culture that was created over many decades in which commission was a really neat way of not having to be completely clear despite disclosure rules.
"So, the fact that a large majority of advisers are still being less than clear is hardly surprising.
"Some of this will be a reliance on percentages rather than actual monetary amounts and some will be a clumsiness around fully understanding what services are offered and what value they provide."
Dan Woodruff CFPCM,
Principal of Woodruff Financial Planning, said: "This (the 73 per cent figure) is disappointing, but not entirely surprising.
"I see plenty of anecdotal evidence that many advisers have complied with the letter but not the spirit of RDR; not much has changed from pre-RDR practices. The prevailing model of 3% plus 0.5% seems to be still around, for no other reason than that was what the providers left us with.
"My experience is that most Financial Planning firms I come into contact with have the right set of values when it comes to RDR. Indeed, most of us were running an RDR compliant model many years previously."



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Joss Harwood CFPCM director at Eldon Financial Planning, said: "I wasn't surprised by the FCA's findings – however we need to note that it is 73% of their sample and is therefore not necessarily an accurate number for the whole advisory landscape. Depressingly, I suspect that it isn't too far off the mark.
"The problem for many firms has been how to get from where they were, where many clients were unaware of the true cost of advice, to where they should be, with clients fully understanding the cost in monetary amounts.
"It reflects the fact that historically, some commissions were far higher than was warranted for the scope of work undertaken.
"Now that the FCA has realised the shortcomings in disclosure and is looking behind the sofa, financial planners should take a deep breath and resolve to work ethically within the rules."
James Pearcy-Caldwell CFPCM, chief executive of Aisa Professional, said: "I am genuinely surprised at this finding. We are finding that clients, prospective and existing, are far more aware and seeking clarity on fee's. If the FCA are correct, then those advisers not being clear will find market forces will force them into clarity, or force them out of business as an extreme."
Ian Shipway CFPCM Director HC Wealth Management Ltd said: "It was inevitable that with the substantial changes required in firms' business models with the introduction of RDR there would be a period before the requirements were fully understood.
"Having said that, with commission disclosure having been a requirement for many years and the basic requirements of the post RDR world well known, to find such a high proportion of advisers not being sufficiently clear is perhaps surprising.
"My suspicion is that most of these firms will have spent the past couple of years working on the professional qualifications requirements and were not sufficiently aware of the changes that were needed in the basic operations of their businesses."
Michael Smith CFPCM, co-owner and director of Accredited Financial Planning Firm Chamberlyns, said: "If the results of the sample are indicative of practice across the profession as a whole, then plainly this is both worrying and completely unsustainable if those in the profession are to be trusted and regarded in the light they would wish to be."



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Financial Planner carried out a straw poll asking:

How does it work in your business i.e. when do you disclose fees and charges and how early in the advice process?


Sean Condon CFPCM, director at Yewtree Financial Planning and chairman of IFP Essex branch


Certainly at a first meeting and more often than not in the run up to that meeting, in email exchanges. 
It makes commercial sense to be transparent early as it helps to build trust, acts as a filter for those potential clients who simply don’t want to pay at all and avoids undertaking any work without a clear engagement arrangement to be paid for it.


Dan Woodruff CFPCM, Principal of Woodruff Financial Planning

We are completely open about our standard fees, and even publish these on our website. Therefore, new prospects usually know how we charge before we meet. These fees are presented in percentage and monetary formats, but we work hard at demonstrating ‘value’ in our initial meetings and after we take on clients. A clear leaflet explaining charges is provided before any proposal is sent.

James Pearcy-Caldwell CFPCM, chief executive of Aisa Professional

It is discussed in the first meeting, provided in our disclosure documentation, and then put into the initial report or implementation plan (the advice stage) prior to any business being conducted.


Ian Shipway CFPCM, founder and managing director of HC Wealth Management

Our policy is to agree our terms before any advice process begins, and a client is required to sign a letter of engagement that contains the specific fees before any work is undertaken. Thereafter we provide each client with a statement of fees charged every six months.

Joss Harwood CFPCM, director at Eldon Financial Planning

We’ve always been upfront and open about what service we can, and will, provide both initially and ongoing. We spell out exactly what it will cost. At each regular review we provide a written report with the cost of investment and our fees clearly stated with percentages and monetary value. 

IFP: FCA report shows importance of genuine Financial Planning service

The IFP responded to the scathing report about the failure of advisory firms to provide correct cost information to customers by stressing the importance of a genuine Financial Planning service.

Steve Gazzard CFPCM, chief executive of the IFP, said: "Firms need to deliver the right service at the right price and communicating the cost effectively to their clients is essential. 

"By engaging a CFPCM professional or an Accredited Financial Planning FirmTM consumers can have confidence that as per the very first point in the IFP's Code of Ethics, clients' interests really do come first.

"One of the many criteria we use when assessing Accredited Financial Planning FirmsTM is to check that not only is there a clear and consistent fee strategy in place but also that it is being communicated effectively to clients."

Former IFP President Ian Shipway CFPCM, founder and managing director of HC Wealth Management, said: “I agree with the IFP to the extent that you need to have a value proposition a client is willing to pay for on which to base charges. “The most sustainable of these, and the one that has proven to be very attractive to thousands of clients around the world, is proper Financial Planning.”

Sarah Harragan CFPCM of Grangewood Financial Management Limited said: “I don't really agree with the IFP’s comment - it doesn't show that more genuine Financial Planning firms are needed just because some people can't get their act together and say what they charge.

“What it does show is that whatever your service, whether that's limited advice on pensions, or full holistic planning, you need to know your service and see the real value your service gives to people, so when you say your fee you and they are confident that it's worth every penny.”

James Pearcy-Caldwell CFPCM, chief executive of Aisa Professional, said: “As a member of the IFP I understand their positioning, but we must never forget that we want financial advice to be available to the whole of the market, and not just the few. It’s not pragmatic, nor viable, for every person to have Financial Planning available from top quality advisers.”