Outsourced Paraplanning Charges

Sam

We currently charge a per case basis for paraplanning work and a new client has asked me to justify why some cases are more expensive than others (i.e.: drawdown more expensive than an ISA transfer).

Has anyone ever encountered this kind of query before?

I’m struggling with how to put my thoughts into words to reply to them.

Many thanks

Andy_Schleider

I charge more for drawdown than an ISA transfer, as the drawdown is a more complicated piece of advice, and more work is required. For example, cashflow will probably be needed, and there are other factors which may affect the advice.

An ISA transfer, in comparison, is pretty straightforward.

That said, if a new client is questioning the fees already, I would treat that as a red flag. I'm not really in the habit of justifying my costs, and it will likely lead to problems in the future, where the adviser doesn't value your work, and then you have issues extracting payment.

Wildparaplanner

I'm in agreement with Andy, if an adviser can't see the reasons behind a drawdown case being more work than an ISA switch, then they're either testing you (which is unprofessional) or they're trying to get you on the cheap / will cause you issues in the future.

benjaminfabi

Hi Sam,

It's the same from me. Drawdown is more complex. In terms of wording, I would be very tempted to reply with a question on why they think it should cost the same!!

But if you're not that way inclined, you can discuss issues around the FCA's thematic review on retirement income advice earlier this year, and specifically how a personal recommendation for a retirement income product requires a higher level of KYC and solution planning research to justify than an ISA transfer.

If you can, I would consider creating a 'costs factsheet' to cover this in more detail than you're being asked for. Then you have it for future clients. It would be fairly easy to put together a 3-column grid for a few different areas of advice and explain it. I'm thinking Advice Area, Typical Components, Typical Cost as the three columns and then rows for things like ISA transfer, First-time drawdown, HNW pension funding, IHT strategy etc.

This would give your clients a visual understanding of how your work varies in complexity and cost. And you can use AI to help you build out the first two columns.

benjaminfabi

I haven't read the output in detail, but I made the attached with Claude.ai (professional plan) in about 2 minutes using this prompt:

Here is a forum question:

We currently charge a per case basis for paraplanning work and a new client has asked me to justify why some cases are more expensive than others (i.e.: drawdown more expensive than an ISA transfer).Has anyone ever encountered this kind of query before?I’m struggling with how to put my thoughts into words to reply to them.

Here is my reply:

Drawdown is more complex. In terms of wording, I would be very tempted to reply with a question on why they think it should cost the same!!
But if you're not that way inclined, you can discuss issues around the FCA's thematic review on retirement income advice earlier this year, and specifically how a personal recommendation for a retirement income product requires a higher level of KYC and solution planning research to justify than an ISA transfer.
If you can, I would consider creating a 'costs factsheet' to cover this in more detail than you're being asked for. Then you have it for future clients. It would be fairly easy to put together a 3-column grid for a few different areas of advice and explain it. I'm thinking Advice Area, Typical Components, Typical Cost as the three columns and then rows for things like ISA transfer, First-time drawdown, HNW pension funding, IHT strategy etc.
This would give your clients a visual understanding of how your work varies in complexity and cost. And you can use AI to help you build out the first two columns.

I'd like your help constructing the proposed costs factsheet