Charges

edited September 7 in General

Hi all!

I'm interested to hear about how other firms (both advisory firms and outsourced paraplanners) structure their charges to their respective clients (i.e the end client or the adviser).

Increasingly, when we take on new clients and review their existing pensions/investments, we are finding that the majority have a number of difference schemes and so most are what we what call 'multiple' cases. Aside from the obvious contingent/ non-contingent hot potato, this gives us somewhat of a dilemma.....

Currently the cost to our clients is generally the same if we were to recommend a pension transfer of 1 plan with a TV of £100,000 as it is for a transfer of 4 plans with a combined total of £100,000, which requires more info gathering/ research/ analysis time.

We want to continue with a percentage based, largely contingent structure, but wondered how other firms deal with this particular issue? We are considering charging an additional fixed fee 'per plan' if there is more than one but are very open minded. How do outsourced paraplanners build their fees in this sort of scenario ? Or if you work directly for an IFA, how does your firm deal with 'multiple' cases?

Thanks in advance

Caroline :-)

p.s. Obviously I appreciate that outsourced paraplanners work on a non-contingent basis, I'm more interested in how your make the charge commensurate to the time involved.

Comments

  • Like you say, can't you just amend your fee agreement to add a clause to the % contingent charge by saying something like: "We will charge an additional fixed fee of £XXX for each additional pension plan we review. This will be in addition to the % charge of X% of the total transfer value."

    The £ amount should be based on whatever you feel your business needs to charge to make the work profitable. Do you time record? If not, could you time record a few cases to give you an idea and base it on that?

    Jonny (paraflex)
  • @parawhat said:
    Like you say, can't you just amend your fee agreement to add a clause to the % contingent charge by saying something like: "We will charge an additional fixed fee of £XXX for each additional pension plan we review.

    This is how I do it. Take a transfer for example (it doesn't matter whether it's a DC switch/ISA/DB transfer). I have a 'base cost' for the actual transfer, and then a further charge for each additional plan where there is a consolidation of individual policies/schemes. I don't percentage charge; I have a fee schedule, and it's loosely based on my hourly rate. As you say, I have to work on a non-contingent basis, as the work still has to be done. Obviously the work involved with a DB transfer is more detailed than it would be for a DC or ISA switch and my fees reflect not only the average time it takes to complete a piece of work, but also the complexity of the type of work I am doing.

    I do record my time, and I found that I have been spending more time on DB transfers, especially recently, and this will continue beyond the rule changes from 1 October. Consequently, my fees for this have increased and will remain under review while the new rules 'bed in', so to speak

  • richallumrichallum Administrator

    WE work in a similar way to @Andy_Schleider Fixed fees with base cost and extra for additional policy/scheme/portfolio.

    Paraplanner. F1, Apple, Nutella, ice cream. No trite motivational quotes. Turning a bit northern. Republican.

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