Hourly Fees and Fund Based Fees

Question 1

Benefits of hourly fees

Answer 1

• Easily understood/transparent/known cost
• Familiar/same as other professions
• Based on actual work undertaken/ amount invested is irrelevant/ does not effect the investment value/ cheaper for larger sums
• A fee cap can be agreed

Question 2

Drawback of hourly fees

Answer 2

• Can be seen as inefficient as adviser could run up the clock.
• Can put of clients from contacting adviser as extra cost.
• Paid from personal funds/ client must write a cheque.
• Final costs are unknown/ can be higher costs if smaller amounts are invested.

Question 3

Fund Based Benefits

Answer 3

• May be able to negotiate lower fees
• Payment via provider and not from personal funds
• incentive for adviser to grow funds
• Lower fees for lower investment amounts

Question 4

Fund Based Drawbacks

Answer 4

• Difficult to predict the costs incurred year to year.
• may not reflect the advice and Time spent by adviser/ may be excessive in relation to Work carried out.
• Extra charges may be made for other work/ services.
• Reduces potential investment growth/ fees may be deducted from tax efficient investments.