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Welcome to our blog, the place we get things off our chest. It's a mix of rants and raves, often about fees and the cost of financial advice, along with anything else we think you might find useful.

The first (fee) cut is the deepest

By Justin Modray, published 12 January 2018.

When we launched Candid Financial Advice our main motivation was to shake things up in an otherwise rather sleepy industry. We wanted to provide great advice and service, but at a fair price and in a way that our clients always knew any advice was driven by having their best interests at heart. That shouldn’t be too revolutionary, but it's a concept that (in our view) the financial advice industry has struggled with over the years.

Just over four years in, and with a lot of hard work, it feels like we’re making good headway. Whilst there’s still a long road ahead, we’ve proven that it’s possible to build a decent and profitable advice business without putting profit before principle.

There’s no great secret to how we do this: keep business costs low, use IT, work hard and put clients first. This means you won’t find us in plush offices or taking long lunches, and Ian and I don’t pay ourselves fat salaries, instead putting the money back into the business and recruiting our economics and finance graduates. Ultimately we hope and expect to prosper eventually, but it will be as a by-product of building an exceptional business.

Just as well really...since we’ve decided to cut our initial advice fees overall, so no chance of getting rich quick now even if we wanted to! Joking aisde, while it might seem foolish to cut our initial fees (given they are already very low by industry standards) it makes perfect sense to us.

Our previous initial fees were based on a percentage for a given amount invested, which reduced the amount increased. For example, at £500,000 the fee was 0.40% and at £600,000 it was 0.35%. Nice and simple and it generally worked, but it also threw up anomalies: for example, someone investing £590,000 would theoretically pay £2,360, while someone investing £600,000 would pay £2,100. Of course, in practice we’d manually adjust fees where required to ensure they were fair, but much better to have a fee system that didn't require such adjustments.

The solution we’ve come up with works much better – it just means that on average our initial fees will be a little lower. So whilst it’ll hit our pockets, we think it’s a price worth paying for clarity.

The new charge is a fixed £1,500 plus 0.10% of the portfolio value above £150,000 (capped at £3,000). And for portfolios below £150,000 there’s a flat 1% fee with a minimum of £1,000.

So, going back to our example, the initial fee on £590,000 will be £1,940, rising to £1,950 on £600,000 – much cleaner and logical.

We know most people who read this blog are existing clients, so none of this really relevant as we very rarely apply an initial fee to subsequent investments/top-ups, but hopefully it's re-assuring that we remain true to our principles.