South-Wales based independent financial adviser (IFA) firm Bancroft Wealth announced recently that it would charge its clients a flat fee of £500 for financial advice “regardless of the size of their portfolio, rather than charging on a percentage of assets.”

This move has divided financial advisers across the UK who have argued that this sort of service is not possible for a flat fee, but Bancroft Wealth founder Clive Russell – an IFA of 27 years – believes this model will provide greater value for clients.

Robin Powell, journalist, financial educator and investor advocate said on Twitter: “Looking at the website, it doesn’t appear that there is any form of financial planning on offer – more a fund selection advisory service with expensive funds.

Powell adds: “Investors may be better off going to Vanguard and buying a life strategy fund. At least this firm [Bancroft] is trying though!”

“As long as the client is clear on what they are getting for their money, I have no problem with it, but let’s make sure we are comparing like with like.”

Former IFA and founder of the Initiative for Financial Wellbeing Chris Budd said in an article in Professional Adviser: “Financial planning means working out what a client wants from life, then spending their money on that. It is about helping to improve the level of wellbeing a person gets from their wealth. A flat fee of £500 for ‘wealth management’ is not going to address such issues.

“As long as the client is clear on what they are getting for their money, I have no problem with it, but let’s make sure we are comparing like with like. To compare the ‘effect of charges’ between a simplistic, low cost ‘wealth management’ offering with a full financial planning service would be disingenuous.”

Meanwhile, Cambridgeshire-based IFA Victor Sacks welcomed Bancroft’s flat fee and said he hoped it would encourage more people to seek financial advice. He told Professional Adviser: “We are not a one-size-fits-all profession. If someone is going to come in and talk about the importance of receiving financial advice, then great – the more people we have come in offering a service I think it’s great, and then people have got a choice,” he said.

But, Sacks added, attention to fee structures took away from the real issue affecting the advice industry, which was, in his opinion, people being scammed.