What and how to pay
To quote Warren Buffet, the American business magnate, investor, philanthropist and one of the wealthiest people in the world: "Price is what you pay – value is what you get". We agree with Warren – and we like to think that we give you great value for money.
‘What you pay’ is the result of what you ask us to do, how complex it is and how long it takes us to do. Fees usually come under two headings – the ‘adviser charge’ we make for doing the work and any ‘third-party costs’ that may arise from doing it, for example, mortgage arrangement fees charged by the mortgage lender.
‘How you pay’ can vary, but depends on the type of product or service we’re providing. For example, if we’re arranging insurance cover then the adviser charge may be paid as a commission from the insurance company and if we’re finding you a mortgage, the mortgage arrangement fees can be added to the cost of the product.
We like to get talk of ‘payment’ off the table as soon as possible so, as we can usually be quite precise about the charges you may face, we discuss the cost of what you want us to do during the initial consultation stage. Having agreed the price we then look at the possible payment options and agree the best method for you. Naturally, we won’t start any work and you won’t incur any charges until everything has been agreed.
There are three ways of paying the ‘adviser charge’ if we’re providing wealth management services; each can be applied independently in each of the four steps in the Financial Advice Process.
- Percentage fee
A straight percentage fee is charged against the amount invested or under management. Generally it’ll be between 1% and 3% depending on the complexity of what you want us to do.
- Hourly rate
Depending on the complexity of what we’re doing, it usually takes between 15 and 20 hours to carry out the Consult, Advise and Implement steps of the process so, as our hourly rate is £300 per hour, our adviser charge is going to be around £4,500. However, this isn’t a ‘blank cheque’ as we’ll give you an estimate of the time we think it’ll take before we start.
- Fixed fee
It’s sometimes possible to charge you a fixed fee, particularly if what we’re going to do is largely covered by a specific charge from a third-party.
If you ask us to provide a professional mortgage service you have several payment options: you can choose to pay with a one-off fee, by commission or by a combination of the two.
The fee may be a straight, fixed-fee or it could be a percentage of the loan advance. We may agree a fee is payable for researching the mortgage market and providing you with mortgage-related advice. This initial work could be paid at the outset after which we receive commission from the mortgage provider if you decide to go ahead and act on the results.
For transparency, all commissions are disclosed in the implementation stage of the process as a KeyFacts illustration and we will, of course, agree with you in advance whether they’re to be retained by us or refunded to you.
If you accept the mortgage offer we recommend, the mortgage provider may charge a booking fee (to book the mortgage product) and/or an arrangement fee. Arrangement fees can be added to the loan but lenders can’t automatically do so without your consent. We’ll discuss this with you if and when they arise and explain the best option, given your individual circumstances, for paying them.
If you buy a non-investment insurance product we’ll normally receive commission from the product provider and this is frequently used as the method of paying the adviser charge. For transparency, all commissions are disclosed in the implementation stage of the process and we will, of course, agree with you whether they’re to be retained by us in payment or refunded to you.
It’s quite common for there to be specific charges for some elements of the service we’re providing you with. These are often the ‘standard fees’ charged by banks and other third-party organisations for performing a specific, and usually routine, task that only they can carry out, for example, the fees charged for carrying out a mortgage valuation. We’ll confirm these when we discuss and agree the cost of you engaging us and will charge them as separate items.
How to settle your adviser charge
‘How you pay’ can vary, there are different payment options depending on the service you engage us to do.
You can pay any fees that are due to us by cheque, bank transfer or direct debit, whichever is most appropriate and most convenient for you. It may be possible – and, if it is, you may decide it’s preferable – for the product provider to pay us on your behalf. In this instance, the fee will be deducted from your investment by the product provider and paid to us.
If the charge is for providing an ongoing service we’ll advise when it’s due as it may either be payable immediately or at a specified time in the future. The fees will be invariably deducted from your investment by the product provider and paid to us.
If you buy a financial product, you can choose to have your adviser charge deducted from the product in instalments. Instead of paying ‘up front’, you can pay indirectly through deductions from the amount you pay into your product so, although these deductions will pay the adviser charge, they’ll reduce the amount being invested. For example, you want to set up a new pension plan and make a £50 per month payment into it. The adviser charge we agree is £500 which means you could either make an up-front payment of £500 or we could take the first ten monthly payments of £50 or take £10 for the first 50 months.
We usually receive commission from the product provider if you buy a non-investment insurance product (we’ll tell you how much commission will be paid before you complete any application forms). If this is the case you could opt to pay us indirectly through the charges made by the product provider to cover their costs and any commission they have to pay. For example, you want to open a 10-year life cover policy that will cost you £20 per month; the commission we receive being, say £400. However, if you paid the £400 up-front, the insurance company may reduce the premium to, say, £17 per month, as the commission they would have paid us, has already been paid.
We’ll tell you if VAT is due on any part of the process and, if it is, we’ll send you an invoice on completion of the work done.
For more about how much our pension and investment services may cost you and how to pay us, please see our Personal Client Agreement brochure; for more about mortgages please see our Mortgage and Protection Agreement brochure.
How can One Financial Solutions help you?
We advise on a wide range of financial services including protection for both you and your business, general and business insurance, savings and investments, commercial finance, pensions and auto enrolment, employee benefits, profit extraction and mortgages: our aim being to offer you ‘one solution’ for all your financial needs.
We provide truly independent financial advice, sourced from the whole of the financial marketplace, for individuals and commercial businesses throughout the United Kingdom.
Please call us on 020 3714 9565 for a confidential conversation about how we can help you, or ask us to call you by sending an email to email@example.com.