You know the moment. 40 minutes in. Gone well. They like you, you like them, everyone’s getting on.
Then you have to say the fee.
And you say it slightly too fast. Maybe you soften it a bit on the way past. They say “yeah, no problem” because they’re British and so are you, and both of you move on quickly because nobody wants to be the one who makes it awkward.
Nothing got explained. Nothing got justified. A number went across the table, and everyone was relieved it was over.
Now have a look at what that costs us.
TLF Research asked homeowners what they made of the fee they’d paid their broker. 19% said it was justified.
19%. Not 19% said it was too dear. 19% said it was justified. The rest either thought it wasn’t, or didn’t have a view either way — which is worse, when you think about it. You took £500 off them and they walked away with no opinion about what it bought.
A tenth of them said outright that a fee-free broker could have got them the same mortgage. 6^ didn’t know fee-free brokers existed. And nearly one in ten had no idea the lender was paying you as well.
The FCA puts the average fee at £510. It hasn’t shifted since Consumer Duty landed. So,whatever we’ve all been doing for the intervening years to demonstrate value, the market has priced it at exactly the same number as before.
And now the bit that should actually worry you.
L&C’s chief executive said in January that the FCA’s recent consultation pointed at what brokers charge and “felt like the justification to point more customers towards execution-only.”
Our fees. Being used as an argument for sending people away from advice altogether.
Not our outcomes. Not our advice quality. The fact that a decent chunk of the public can’t tell you what they got for the money.
The trouble is, we’ve never made the case. Not properly, not out loud, not to the person actually paying.
An owner told me a few months back that he’d dropped his fee from £595 to £395 because a client “seemed hesitant.” Then spent the next 40 minutes telling me how much work goes into a complex case.
He knew exactly what he was worth. He just wouldn’t say it to the one person who needed to hear it.
So, what is the fee actually for?
Not effort. It was never effort. Nobody has ever cared how long you spent on the lender’s portal, and AI is about to take most of that off your desk anyway. Any firm still justifying its fee by hours is walking into an argument it loses in about 18 months.
It’s for judgement. For the broker who works out the term extension request is really a credit card problem. Who notices the accounts don’t reflect what that business is actually doing. Who says no to a case a volume operation would have shoved through to completion.
And it’s for everything after completion. Which is where most firms quietly stop earning it.
That’s what the 19% is really telling us.
If the only time a client hears from you is the 12 weeks between enquiry and keys, you sold them a transaction. The fee-free firm sells the identical transaction for nothing. On that comparison your client is right, and you lost the argument before you opened your mouth.
If they hear from you through the whole two to five years — properly, not a rate reminder at month 54 — it isn’t the same product any more. You’re not charging for an application. You’re charging for someone who’s still watching.
But only if that’s true. You can’t charge for a relationship you haven’t got.
Two things worth doing this week.
Ask every adviser in your firm to explain the fee in three sentences without apologising. Don’t warn them first. See what comes back.
Then ask yourself the harder one. If a client said “what do I get that a fee-free broker won’t give me” — is your answer something you genuinely do differently, or just you insisting you’re better?
Because the regulator is looking at our fees right now and working out whether advice is worth the money.
We either answer that or someone answers it for us.
One in five thinks we’re worth it. That’s not a pricing problem.
That’s a case nobody ever bothered to make.
