There has been a lot written in the media about how much money asset managers’ charge for managing their funds, and what has been done by regulatory bodies to make this more transparent and competitive for retail investors.
Indeed, the EU’s financial regulator (ESMA) has warned of the impact charges can have on savers’ returns, in a sign of further pressure on investment managers to control fees.
This comes as no surprise, due to the ongoing implementation of MiFID II, UCITS and package retrial and insurance-based investment product rules by the industry.
It is therefore, not new that the same scrutiny is being applied to financial advisers and how much they charge their clients for services.
We look at the findings of the Heath Report Three (THR3) published on January 15 of this year (which surveyed 865 advisers and 249 firms in the UK), which analyses the behaviour of the financial adviser community and looks at how much they are being paid.
The report found 30% of firms with just one adviser earned £100,000 to £249,000, on average, in annual ongoing service fees, with just 6% of these firms earning less than £25,000 for the same charges.
The level of service fees grew for those firms with more advisers, with 71% of businesses with between five to nine advisers earning £250,000 a year or more.
Of the medium sized firms with between five and nine advisers, 19% earned more than £1m in advice fees per year and 25% earned £250,000 to £499,999.
Sabuhi Gard is an investment writer at Incisive Works
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