How much would you pay to a person who would help you increase your income by several thousand pounds? We are talking about a return that should be made for a professionally crafted investment portfolio by a financial adviser. Or for a successful estate planning, advice on tax paying, or anything else by the same specialist.

Well, surprisingly (or not) 2 out of 5 British people in 40-and-over age group wouldn’t pay a penny to their advisers. It turned out due to a survey done by the US fund manager Legg Mason.

Britons underestimate such services even more than others – 1/5 of the surveyed would pay only about £50 an hour. Only the rest of the people would be prepared to be charged by standard prices. All the more startling is that high-net-worth Britons are Europe’s most cautious investors. A third of their portfolios are, on average, tied up in cash.


What makes this so important is the change in recent years in how financial advisers are paid. The Retail Distribution Review, which came into effect at the end of 2012, banned fund managers and savings providers from paying commissions to independent financial advisers. Instead, IFAs and investment platforms were obliged to charge explicitly for their services and to make those charges simple to understand.

With the new rules also requiring IFAs to obtain extra qualifications and to undertake regular training, the number of advisers fell sharply, with about a quarter leaving the industry. At the same time, most of the big banks stopped offering in-branch advice on cost grounds, with only HSBC continuing to advise customers with relatively little to invest. Barclays pulled out altogether, while the entry points for advice at Royal Bank of Scotland/NatWest, Lloyds and Santander are respectively £250,000, £100,000 and £50,000. The result is that millions go without any financial advice and a so-called “advice gap” has emerged between those who cannot or will not pay for financial advice and those who do.

One couple lost their £350,000 nest egg due to bad advice — and the firm involved has yet to refund them


David and Sheila Solomon were looking forward to a comfortable retirement, having saved into pensions for more than two decades and paid a financial adviser to help them make the right decisions. Now, however, thanks to his advice, their £350,000 savings are worth just £3,000.

Their adviser — Paul Herd, a partner at MFS Partnership in Plymouth — invested almost all their money in a single, unregulated, “high-risk” fund in 2010, despite being told they were “cautious investors” who intended to retire just four years later.

MFS Partnership admits it owes the Solomons about £500,000, based on a calculation stipulated by the Financial Ombudsman Service (FOS), as this is what their fund would have been worth had they been properly advised. Yet six months after the damning verdict, they are yet to receive a penny.

The Solomons’ story raises questions about the difficulties of providing for the future and how anyone can know their life savings are in good hands.

This is not the only question hanging over Herd’s advice. In another FOS ruling, MFS Partnership advised an 82-year-old woman to invest £99,000 of her £125,000 savings in the same high-risk investment as the Solomons. She has subsequently died. MFS said Herd was also her adviser and she also had a “low attitude to risk”. The FOS found in her favour.


Many investors spend millions to pay for the services of financial advice companies, while they can get the same services online for cheaper price.

One of the financial advisers working independently for Intrinsic (the largest financial advice network in Britain) wants to leave the company. The main reasons are the overestimated prices of the company and the range of funds that has to be made wider.

Such networks offer help and advice in marketing, compliance, and other spheres connected to finances. They also keep a part of their clients’ income, and there are certain conflict risks that are becoming visible now.

Diane Carr – the owner of Crosbie Carr Financial Solutions – also works with Intrinsic, as well as other 3,000 advisers. She thinks to leave because of the restricted model the network has, training its workers so they charge more and give less. According to her, the company with its limited fund range charges as much as IFA that has to consider and offer their clients about 6,000 funds.

She says Intrinsic’s upfront fee of 3 per cent and annual charge of 1 per cent are typical for whole-of-market IFAs. She says the network’s restricted advisers offer little choice of investments and ask only 12 questions of clients to establish their risk appetite.

“How can a restricted adviser get away with charging the same as an IFA for not really choosing or managing investments on a continuous basis? They are doing something a schoolchild can do: asking the client to deliver an Attitude to Risk definition, then looking up the funds available for that.”

Carr claims the service is disguised “robo advice” — the automated online service being developed by some companies as a cheaper alternative to individual financial advice.

One fund on offer, the £722 million Premier Multi-Asset Distribution fund, costs at least 2.67 per cent a year for clients with £50,000 before advice charges are added — a 3.67 per cent reduction in the annual return.

Carr worked with Positive Solutions for 11 years before the advice network was acquired by Intrinsic in 2013. A year later, Intrinsic was bought by Old Mutual Wealth, the South African fund giant that trades on the London Stock Exchange. Carr claims the company encouraged her to put her charges up to 1 per cent.

“I typically charge 0.25 per cent for advising a client on a pension worth £250,000. Intrinsic can use its buying power to cut costs but clients are not feeling the benefits because advisers are being encouraged to add 1 per cent per year. This could ultimately halve the expected returns for a cautious investor.”

Carr suggests that the firm’s business model is at odds with the aims of the retail distribution review, introduced by the regulator in 2013. That shake-up was focused on stripping away hidden commission from the sale of products through financial advisers. It also compelled them to be more upfront about fees, and clarify whether they recommend products from across the market or only use a “panel” of providers — the difference between a genuinely independent adviser and a restricted one.

Recent research has found that 13 out of 17 national wealth advisory firms are restricted. The analysis by Chase de Vere also found that only one restricted adviser, Skipton Financial Services, displayed its status openly on its website.

Patrick Connolly, a certified financial planner at Chase de Vere, says: “We don’t believe that restricted advisers necessarily give bad advice, but we do believe that people can only be truly confident that they are receiving unbiased and impartial advice, with no conflicts of interest, if they use an IFA.”

Connolly says larger firms may be “far more focused” on selling products to shore up revenue. “This can cause a potential conflict of interest between ‘restricted’ advisers and their clients.”

Justin Modray, the founder of Candid Financial Advice, says that an upfront charge of 3 per cent and an ongoing charge of 1 per cent per year can “mount up to many thousands of pounds”.

His own research found that only 10 per cent of all national advisory firms, independent and restricted, disclosed their fees on their websites. Modray says: “When advisers do eventually disclose costs, they are generally far from clear. Additional advice charges, as well as those for investment funds and platforms, may not be explained.”

Intrinsic’s advisers can choose whether or not to publish their fees, and many do not. Richard Freeman, the chief executive at Intrinsic, says: “We do see restricted advice as a lower risk, lower-cost model that can deliver excellent outcomes for the vast majority of clients. However, we also recognise the value of independent advice for certain clients.”

He adds that charging should be agreed with clients as an “explicit” percentage and monetary amount. “The majority of advisers are not charging clients for time spent researching and picking funds. They focus on having a deep understanding of a client’s circumstances and financial needs.” Freeman also says the returns on the Cirilium funds were within the top quartile compared to its peer group over three and five years.

One of the things in savings and finance that most people do not entirely understand is the different insurance covers they take. Such information is crucial and it is important for financial advisors to explain in details what their clients’ insurances pertains to avoid unwarranted losses and get maximum benefits. For all you van insurance needs visit Wilsons Insurance.


No matter whether it will be our first mortgage or you are remortgaging, some knowledge is necessary to have a successful deal. Here we present some facts about the world of prices and mortgages of nowadays.

1. Halifax says the average costs for a home in the UK is now about £204,552.

2. According to the Mortgage Advice Bureau, the prices for houses have risen by 9% in a year, with mortgage rise of 4%. The average application for mortgage this year, including the rise, is for £167,842.

3. The MAB also says that the average deposit this year is £71,301, which means people have more opportunities to have a better remortgage deal.

4. Which? reports that the average person buying real estate for the first time puts down a 17% deposit. At the average house price of £204,552 that means you need to save up about £35,000.

5. On top of that, you’ll need a further £12,000 to cover the cost of moving, according to Post Office Money. “Potential homebuyers should set aside savings specifically for these costs,” says John Willcock, head of mortgages at Post Office Money.

6. The number of people with interest-only mortgages is steadily declining. They are much harder to get hold of now, and if you do apply for one you will have to prove you have a strategy in place to repay it.

7. Mortgage rates continue to sit at historic lows, with deals available that charge as little as 1.14 per cent interest. Many experts predict that interest rates will start to climb at some point this year, so it could pay to lock in a low rate now. Fixed rates are proving increasingly popular as homeowners try to protect themselves from rate shocks.

8. A poor credit history and affordability problems are the two most likely reasons for your mortgage application being rejected, say the experts. “Would-be borrowers should get a copy of their credit report and try to improve their score,” says Brian Murphy, head of lending at the Mortgage Advice Bureau. Be honest about your spending. “Getting the monthly budgeting figures down correctly will really help an adviser get to grips with affordability criteria,” says David Hollingworth, a mortgage broker at London & Country Mortgages.

9. Mortgage terms are getting longer. Traditionally, new mortgages are taken out over a 25-year term but more than a fifth of homeowners are now searching for mortgages with terms of 30 years or more, according to the Mortgage Advice Bureau. Remember, however, that a longer term means the amount of interest you pay will rise significantly.

10. Mortgage lending was at a seven-year high in November, according to figures from the British Bankers’ Association. There were 44,960 mortgage approvals, with a total value of £7.9 billion, made to homebuyers in the month.


According to the Mortgage Advice Bureau report, nine of eleven regions are experiencing rise in deposits needed to buy a home. The average rise is 0.9% and the number is now £71,301.

The largest rise is seen in East Anglia – the increase there is 11.6% from £46,504 to £51,877. The average numbers are still the highest in the capital – London deposits were £170,328 in September, and now they’re £179,248. The number of products available for a mortgage has also risen though, from 16,465 in September to 16,620 now.

Brian Murphy from the MAB said that the bigger the number of products for mortgage is, the better the range of choices for customers will become.

The rise of objects was noticed not long after the Knight Frank estate agency has found that due to the 0.3% price fall in October, the growth in the centre of London had experienced a slowdown to 0.9%.

It said that after a year of the new stamp duty system, which raised the tax for properties worth more than £1.1 million, a growing number of vendors had begun to set asking prices that reflected the more subdued level of demand and buyers’ heightened sensitivity to prices.


The number of complaints from desperate clients of payday lenders has risen dramatically lately.

The Financial Ombudsman Service reports the largest increase of complaints in the loans sector from the beginning of the year to March. The complaints on different payday loan firms increased to over 3,200, which is a 178% growth.

The insurance protection of payments is one of the most important topics for discussing nowadays. However, the disputes don’t solve the troubles, as the complaints on credit reference firms, payday loan companies, etc. keep increasing.

According to the ombudsman, people terrified that they would lose everything due to payday loans knew they had to be treated better, or at least fair.

Complaints centred on lenders failing to carry out affordability checks, refusing to accept suitable repayment plans and aggressively chasing debts. There were cases of lenders using continuous payment authorities that left the client with no money to pay basic bills, as well as complaints about damage to customers’ credit records.

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