More than eight years since founding Chatfield, we are fiercely proud of the way we advise our clients and welcome debate on the virtues of our approach.

The bad news for our clients is that they have to pay us. The good news is that nobody else does.

We do not sell products, nor do we accept any commissions from product providers. We only sell our time and our expertise. Our compensation is fully transparent.

We believe this is the right thing to do.

If you don’t pay your financial adviser, who are they working for? You or the product providers? We would argue it is the latter.

We disagree with the vast majority of our peer group who work on the basis that they can only get paid when they sell you a product, by which I mean you take out a new pension, ISA, investment bond, life assurance policy and so forth.

If you already have one of these products, most advisers will try to justify moving it from Provider A to Provider B. Conveniently this enables them to collect some commission from Provider B.

Commission is banned, isn’t it?

You may have heard that commission is no longer available and that all advisers must now charge fees. To be honest, nothing has changed. Whereas in the past an adviser would collect say, a 2% commission, they now charge a 2% fee, still all paid to them by the product provider. There is no difference between these two approaches. A fee paid by the product provider is just commission in disguise.

Our fees, both to become a client and for ongoing advice, are always for fixed amounts. The enormous majority of our peers charge percentages. There are two main reasons for this. 1: in days gone by this was all product providers would offer, and 2: not enough people know what a percentage is. Charging 0.75% p.a. on a £320,000 portfolio doesn’t sound very much, does it? Whereas £200 per month sounds a lot more. In fact, they are the same.

We have been asked to help other financial advisers move to fixed fees and in every case their biggest fear is admitting to their clients how much cash they have been charging them all along!

Investing

On investments we advise clients to use evidence-based funds that are supported by decades of peer reviewed academic research and Nobel prize winning economists. We are strong advocates of Dimensional and Vanguard’s approach, neither of which, we fully acknowledge, are household names (NB Vanguard is the second largest fund manager in America).

We believe this is the right thing to do. And this is how we invest our own cash.

The conventional approach recommended by most of our peers is to give your cash to expensive fund managers who will try to beat the market. Note the deliberate use of the word ‘try’. This approach is marketing over substance as there are such huge vested interests at stake here that household name fund managers like Fidelity, Invesco Perpetual, JP Morgan and the like, aided and abetted by the media, will bury any data in favour of the evidence based approach.

There is no evidence to support this conventional investment approach. For example, the previously released S&P Index Active versus Passive report in the UK shows that in the 10 years to 30 June 2015 between 70% and 90% of active funds were beaten by their appropriate benchmark.

A further study by Vanguard shows that the top 20% of funds in the five years to December 2009 ended up being scattered more or less evenly over the first to fifth performance quintiles in the next five year period, an outcome consistent with luck rather than skill.

So it’s true, past performance is indeed no guarantee of future performance! However, it’s very difficult to get people to agree to this, especially when their salary depends on them being able to convince you otherwise!

The reasons why you are investing in the first place and having the discipline to stick to a robust financial plan are far more likely to lead to your financial success than some whizz bang (i.e. expensive) portfolio that claims it does its best to beat the market.

What about property?

We are also happy to discuss with clients the pros and cons of property investing. We are property investors ourselves and understand the value this can add. The vast majority of financial adviser will steer clients away from property. Why? Firstly, if they aren’t property investors themselves they won’t understand it well enough and secondly, they can’t work out how to charge such clients because there is no product provider involved from which to take their fees / commission.

Financial advice is not a product or a fund. It should be honest and transparent. It should be simple and understandable.

We believe in what we do and that it is the right way to do it.

We welcome any debate.