Author: Tom Wiseman, Managing Director, Enhance London
In my world, offering good value for money is achieved through the provision of sound advice, exacting service and delivering positive long-term investment outcomes for clients net of all fees charged. It isn’t rocket science and I’ve always found that clients are prepared to pay fairly for personalised, professional advice.
However, I have reviewed a number of potential client engagements recently and had to dismiss them out of hand when their fee expectations came to light. The fees proposed barely covered the overheads of running such accounts, let alone the associated advice liability or allowing for a small profit.
Fee pressure is firmly downwards in the investment industry and investment consultancy is no exception. Advancements in technology and an increase in the number of market participants are partly to blame, but I can’t help but feel that consultants have inadvertently contributed to this skinny fee environment.
I have already waxed lyrical in this blog about some of the shortcomings of Investment Consultants, particularly the provision of a posh reporting service dressed up as consultancy, which enables firms to charge handsomely for their reporting whilst avoiding the costs implicit in providing well researched and qualified on-going advice.
I believe that this has created a distorted perception in the market of what proper consultancy is and the fees it should command. For this reason I have decided to publish Enhance’s fee tariff quoting both an hourly rate for project work and a tiered percentage fee subject to a minimum annual charge.
This tariff has been constructed on the basis that my team will adhere to the highest professional standards, employ the best research and reporting tools available on the market and with an acceptance that we can look after no more than 30-40 retained clients, perhaps significantly less.
Larger consultancy firms may benefit from economies of scale to a certain extent, but there has to be a profitable and sustainable baseline and we are prepared to publish ours in the hope others in the industry are equally sensible and embrace such transparency. After all, providing value for money and being cheap are two very different things.
For more information please see www.enhancegroup.co.uk/fees