Financial adviser fees are an important facet of the adviser-client relationship. Just as when paying for any service, you need to make sure you’re getting what you paid for. For example, when you eat at a cheap fast-food joint, you might not expect the same level of service as you would at an expensive top-rated steakhouse. When hiring an adviser, it’s crucial to understand the difference in service you might receive from each kind of financial adviser.
In this article we’ll discuss some of the different fee structures offered for financial advice.
Since 3 January 2018, EEA-based investment firms are now required to disclose to investors all costs and charges relating to investment products and services. With differing charges and fee structures, you should take the time to learn the different ways advisers may charge their clients. This way, you can explore the various options and potentially choose the one that’s right for you.
Here are some potential ways advisers might charge you for advice and investment management:
Although hourly rate charges may make sense in some cases, Fisher Investments UK believes wealth managers should periodically check in with clients to ensure their investment strategies still align with their current situations and long-term financial goals. An hourly rate may actually discourage clients from seeking their adviser’s counsel in difficult times, such as during periods of heightened short-term volatility. If clients are hesitant to meet with an adviser because of additional fees, advisers may not be able to effectively help clients meet their long-term goals.
Whatever your financial advice costs, you should have a firm grasp on the nature and extent of the total charges at the outset so you can make sure that your adviser’s goals will be aligned with your long-term investing goals.
Fisher Investments UK offers the portfolio management services of its parent company, Fisher Investments. ¹To begin the process, Fisher Investments UK will provide you with a personalised Initial Portfolio Recommendation and charges a one-time fee for this initial advice. If you choose to move forward, Fisher Investments’ ongoing management fee is based on the value of the assets it manages. Unlike an hourly fee structure, this ongoing fee structure allows you to contact your dedicated Fisher Investments Investment Counsellor whenever you have any questions or concerns at no additional cost. Fisher Investments will also proactively contact you on a regular basis to discuss your current portfolio strategy, answer any questions and make sure your goals haven’t changed.
Fisher Investments believes that this high-touch client service helps clients build strong, trusting relationships and gain confidence in their overall investment strategy. With an adviser who charges you by the hour, you may not want to call them for fear of incurring an additional charge. This can be dangerous in times of market volatility when emotions are running high. In these times of heightened uncertainty, Fisher Investments and Fisher Investments UK believe you should be able to call your adviser to quell your fears and concerns. Often, this kind of communication can prevent investors from making unwise and emotional trades in their investment accounts.
Financial adviser fees are an important consideration when choosing an investment manager, but they are not the only consideration. The most expensive price tag is not always indicative of the best quality and, likewise, the low-cost option may not always provide the best value for money.
There are some other important factors to keep in mind when searching for the right investment adviser for your personal traits, financial goals and individual circumstances. For example, customer service is an integral part of any financial advice relationship. After all, you are probably entrusting your financial adviser with your investment portfolio, your future income, and, consequently, your future financial security and prosperity. It is essential that you have a financial adviser who understands your emotions and responds to them appropriately, so that you can stay on course towards your long-term financial goals. While index funds or robo-advisers may appeal for their lower-costs, a good adviser can add significant value in helping you stay disciplined and feel more comfortable during volatile times.
Also, good communication is foundational to a successful adviser-client relationship. It is much easier to stick to a plan if you understand your investment strategy and have a dedicated adviser to help answer your questions and calm any fears. At Fisher Investments, ongoing, proactive communication is crucial to effective client service and education.
Furthermore, a good financial adviser should help educate clients on the market and how certain developments might (or might not) impact their portfolios’ long-term strategy and ability to attain their goals. Fisher Investments makes client education a priority, helping you to better understand your portfolio and how they invest.
Another aspect you should consider before hiring financial advisers is whether they have an established performance history. This does not mean that you should see evidence of it performing brilliantly each year—in fact this might paradoxically be a red flag as it could mean that the adviser is taking a lot of unsustainable risks. Instead, it is better to see how client portfolios have fared throughout business cycles. Has the adviser attempted to call a bear market for their clients and, if so, how often were they right?
While these considerations cannot be priced, a good client-adviser fit can be priceless. So, it is worth considering the amount of service and education a financial adviser provides when evaluating various financial adviser fees.
Fisher Investments UK can help you better understand financial markets, advisers and financial adviser fees. We’re dedicated to helping educate investors and helping them define and achieve their long-term investing goals. To learn more, download one of our educational investing guides or contact us today to request an appointment.
Investing in financial markets involves the risk of loss and there is no guarantee that all or any capital invested will be repaid. Past performance neither guarantees nor reliably indicates future performance. The value of investments and the income from them will fluctuate with world financial markets and international currency exchange rates.
