Nearly a third (32%) of financial advisers expect their customer fees to increase because of the incoming Consumer Duty, recent research has revealed.
Research gathered by Boring Money on behalf of Quilter found that 38% of financial planners are concerned they will need to increase their prices.
While only 9% expect their fees to decrease as a result of the Financial Conduct Authority (FCA)’s Consumer Duty.
The data also showed that 44% of advisers believed profitability would decline, with only 5% saying that profitability would increase.
Jenny Davidson, commercial proposition director at Quilter, said: “The implementation of the Consumer Duty has provided a useful reminder to advisers to evaluate their offerings and importantly price their services accordingly for different client segments. The fact that almost a third of advisers are saying that fees will likely increase may be a reflection of the costs associated with adapting to fulfil the requirements of the Duty, particularly where those costs are borne without wider network support.
“Increasingly, advisers are favouring a more flexible approach to fees models to tailor for the needs of individual clients or client segments, and the facilitation of tiered adviser charging on platforms is playing a significant role in this.”
Customer outcomes
This news comes as research agency Opinium also announced that one-in-seven IFAs still feel unclear about advising clients on what good customer outcomes look like.
Some 66% feel that the FCA has been unhelpful, with 62% thinking it has been unresponsive when developing and implementing the Consumer Duty regulation.
There is also increased concern from IFAs about potential complaints and penalties they may receive for failing to meet the Duty requirements, with 48% saying they are more concerned now.
Alexa Nightingale, head of financial services research at Opinium, commented: “ Consumer Duty affects all financial services firms, many of which will be required to make major changes to adhere to the new rules. This will of course have an impact on IFAs and their practices.
“With the deadline approaching in a week’s time, it’s therefore worrying that 15% of IFAs don’t feel clear about advising clients on what good customer outcomes look like, with a more substantial number being concerned about the potential ramifications they could face.
“Feedback on the FCA’s role has not been glowing so far, so it will be interesting to see how the first few weeks of the Duty play out, and whether the FCA can paint itself in a more positive light among the adviser community.”
