The fee bit...
TFP is transitioning from percentage fees to fixed initial and ongoing fees depending on the complexity of the case.
Previously it charged between 1% and 3% initial; plus 1% ongoing. However, initial is now between £3,500 and £10,000. Ongoing is also between £3,500 and £10,000 per year, broken down into monthly payments. Most clients pay around £5,000.
For a client with £100,000, this would equate to a 5% ongoing charge. Clearly the service is not aimed at this bracket. But for a typical TFP client with £775,000, it equates to 0.65%.
‘For the ongoing fee, clients get at least one annual face-to-face meeting but most long-standing clients get two,’ says Mills. ‘They also get unlimited access to us and the team, quarterly investment reviews and access to the Intelligent Office portal.’
However, the value is in achieving outcomes, such as giving people peace of mind and confidence to retire, spend, and give; with a plan and support team to guide them through the challenges, he says.
‘We’re trying to communicate that our relationship is with the client not with their money,’ adds Jones. ‘The fixed price removes any incentive to implement or gather assets and means if they want to walk away after the planning work, they can.’
Communicating the change has been a ‘challenge’ he says as clients ‘compare it to what other local planners do’. ‘But clients who have been through the process say it is great value.’
If clients accept flat fees, why do more advisers not use them instead of a percentage of assets charge?
‘Why would advisers [move away from percentages] when no one is forcing them to?’ says Jones. ‘Surely it can’t be like this in 10 years. It must change, and we need to prepare for it.’
Where advisers do charge fixed fees, it is usually for the initial work only and they will still take a percentage for ongoing advice.
Byrom says they have not yet experienced any resistance to ongoing fixed fees though it is early in the transition. She advises any planners thinking of transitioning to fixed ongoing fees to thoroughly review the service they want to provide, and the potential costs involved.
‘Ensure this is communicated clearly throughout your business, emphasising why [you are doing it],’ adds Byrom. ‘Don’t dilute the service with any transactional work. And continually review and feed back internally on how you can improve the communication of your service and the fixed-fee payment method.’
She also recommends introducing fixed fees with new clients only to start with. This will provide an opportunity to work out any glitches before rolling out to existing clients.