In the first part of our series "Employed or Self-Employed?" we looked at the potential benefits and drawbacks of each avenue. This week we took it one step further and did a deep dive into the specifics of working as a financial adviser exploring revenue, splits and rewards.
As a Financial Adviser, you are potentially weighing up whether to be employed or self-employed, join a network or be directly authorised but one thing is constant, reward. Regardless of your status, you want to know how you will be rewarded and how much you will be earning.
According to the latest FCA Retail Mediation Activities Return (RMAR) for 2021 total commission, fees/charges and other revenue totalled almost £6bn, which is an average total revenue of £220,368 across the 2378 financial adviser firms with only one adviser. The question that all advisers, particularly new advisers, is how is the £220,368 made up and what fees do I have to pay?
The fees that you as an Adviser will have to pay (monthly and/or annually) will depend on a number of factors like whether part of a network or directly authorised but here are just some of the fees you may have to pay:
- Administration support
- Leads/introduction fees
- Desk fees
- Insurances including PI
- Regulator fees
- Software and CRM licences
- Compliance penalties
Now that we have covered the potential fees that may be payable by you, you will now want to know how your fee income is made up. As an adviser, your fee can be paid as a retainer or by hourly rate. The majority of the fee is made up of time spent working on clients’ accounts and is normally an initial fee or for ongoing support:
- Initial fees - normally dependent on the complexity of the work and if it is ad hoc with the fee being based on the size investments.
- Ongoing fees – these fees are for you providing ongoing service and support with the amount dependent on the portfolio, assets and investments.
It is also worth bearing in mind that some fee income can also come from introducing clients to products belonging to a network for example.
Whatever route you choose to take it’s always worth taking a read through these resources from the FCA and this handy factsheet create as on how charging works for you as an Adviser and what your responsibilities are.
Employed or self-employed is a big decision and naturally, you will have lots of questions, at MCS Group we have over 14 years of experience working with employed and self-employed advisers, so we know the nuances of each and the technicalities involved. To find out more about the roles in Financial Services we are managing at present reach out to Luke Smith, Senior Recruitment Consultant and Hassan Jafaar, Recruitment Consultant in confidence for a chat.
If you have missed the first in our series on “Employed or Self-Employed? make sure and give it a read here now.
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