Consumer Duty: Time-costed initial fees vs percentage based fees.

If you’re approaching retirement or simply looking to get your finances in order, you may be considering professional financial advice. But with so many fee structures out there, how do you know you’re getting fair value?

New rules from the Financial Conduct Authority (FCA), mean that financial advisers must now ensure that the fees they charge are clear, fair, and reflect the value of the service you receive. This is part of a wider initiative called Consumer Duty, which puts your interests front and centre.

Let’s break down two common ways advisers charge and what they mean.

1.    Percentage Based Fees

Your adviser charges a percentage of your investment or pension pot to implement their advice, and they might also charge you a percentage on an ongoing basis to manage your investment or pension throughout the year.

Example: If you wish to invest £200,000, a 1% fee means you will pay £2,000 for the investment advice. On an ongoing basis, if you agree a 0.75% fee, it means you will pay £1,500 per annum for the ongoing management of the investment. 

2.    Time-Costed Fees

Your adviser charges you on the actual time your adviser spends working on your case, similar to how solicitors or accountants charge.

Example: If your adviser spends 10 hours at £150/hour, your fee would be £1,500.

Why this matters under Consumer Duty

The FCA now requires advisers to prove that their fees offer fair value. That means:

• You should understand exactly what you’re paying for
• You shouldn’t be overcharged for services you don’t need
• If you’re paying ongoing fees, your adviser must regularly provide investment reviews to check that you’re still getting value.

What you can do as a client

• Ask for a fee breakdown: Whether it’s percentage-based or time-costed, your adviser should explain how the fee is calculated.
• Understand what’s included: Is it just investment advice, or does it include retirement planning, tax guidance, or estate planning?
• Review ongoing fees: If you’re paying annually, make sure you’re still receiving the services promised.
• Compare models: Some advisers offer hybrid options, like a fixed fee for planning and a percentage for ongoing support.

Final thoughts

Choosing a financial adviser is a big decision, especially as you approach retirement. Under Consumer Duty, advisers must now be more transparent and accountable than ever. 

Whether you prefer a simple percentage or a detailed time-costed approach, the most important thing is that you feel confident you’re getting value for money and advice that’s tailored to your needs.

Dentons Wealth have a transparent fee structure and charge clients who want professional advice on a time-costed basis. Charges for the work involved will be disclosed and agreed with you up front before you proceed with anything. Please get in touch if you wish to know more. 

Although every effort has been made to ensure that the information provided in this article is accurate and correct, the information provided does not constitute any form of financial advice. We recommend that you take financial advice before making any financial decisions.