The Financial Advisors Association of Canada (Advocis) has hit out at a new service which aims to reveal the real cost of a financial adviser.
FeeX has recently announced a new Advised Accounts service in the USA, claiming that clients are often unaware of how much they are paying in fees for these advised accounts. Reporting that advisors are walking away with more than $100billion annually, its CEO Yoav Zurel states that its users “are often outraged when we show them just how much they are paying in fees.” Now, its technology aims to discover the real fees charged by advisors and highlight them in dollar amounts, leading to greater transparency.
However, Greg Pollock, President and CEO of Advocis, believes the FeeX service is failing to take into account the fact that many financial advisors build long-term relationships with their clients and advise them throughout their life stages, while understanding their individual needs.
“The FeeX service solely focuses on the issue of fees and does not take into consideration the relationship between an advisor and his client,” he said.
“We believe that it’s completely within the client’s right to transfer their business to an advisor who is a better suited to them. Ideally, the relationship between an advisor and client is long-term and built on trust and open communication. However, there are some consumers who are motivated by fees and would prefer to work with a lower-fee advisor or a robo-advisor. These types of clients are generally not looking for financial advice.”
When results are generated by the FeeX service, a consumer can choose between providing the advisor with instructions on how to fix their portfolio; or switching to advisors with lower fees. However, Pollock believes that most advisors are providing value for money.
He said: “In our 2015 consumer survey, 96 per cent of clients reported that they believe the advice they receive is valuable; 92 per cent believe their advisor is worth the money they pay; and 92 per cent believe they are better off financially for having worked with their advisor.”