Wealthier clients get the same service

The default model for ongoing adviser fees is a charge of about 1pc of a client’s investment assets. So someone with £100,000 pays £1000 a year for advice.  A client with £1m pays £10,000.  Unlike any other businesses, where buying in bulk gets you a better deal, big clients pay more.

A £200,000 portfolio invested for 25 years would be £32,500 smaller if a 1pc annual fee were taken on the full amount, compared with a £2,000 a year flat fee that increases in line with inflation.  The longer the money is invested and the higher the investment growth – the example is based on 5pc – the bigger the difference.

Over 30 year, and with 6pc annual growth, you would be £100,000 worse off under the percentage model.