If you are paying for something, you usually know the cost up front. Buy a coffee, book a hotel, hire a plumber, and you are told how much it will be. From there, you decide if it is worth it or not. With financial advice, though, things are not always so clear-cut.
For years, especially in the world of savings and investments, fees were buried in the small print or skimmed off invisibly through commissions. Many clients never really knew what they were paying or even that they were paying. That has changed, at least in part, but not entirely.
What Are You Really Paying For?
A financial adviser might be helping you with retirement income planning, cross-border tax strategies, or inheritance arrangements. But how do they charge for that help?
In France, costs typically come in one of three ways: a flat fee (for advice or planning), a percentage-based charge on your assets under management, or through commissions on products they sell. The third is where things can get messy.
Commissions vs Transparent Advice
Since 2018, European regulations (under MiFID II) have made it illegal for independent advisers to accept commissions when giving financial advice. The idea is simple: advice should be paid for by the client, not the product provider. This rule aims to remove conflicts of interest, so if an adviser is getting paid more to recommend one fund over another, are they really working for you?
But here’s the catch: the rules only apply to advisers who are officially classified as independent. In France, the overwhelming majority are not. They are tied to particular products or companies and are still allowed to earn commissions. It is all legal, but it can create confusion.
The difference is stark. Independent advisers disclose their fees clearly, and they are not allowed to take hidden payments. Tied advisers, by contrast, may promote a limited menu of in-house funds or insurance products, often loaded with hard-to-spot charges.
When “Advice” Isn’t Advice at All
I remember one of my earliest meetings with a representative from one of the world’s largest investment companies. He showed me a 50-page booklet listing all their available funds and, with a grin, said, “Only the first page is really interesting.” It turned out the funds were listed in order of how much commission they paid – highest at the top. So, the “most interesting” funds were simply the most lucrative for him, not for the client. I asked him to leave. It was clear we were not at all on the same page!
Another example comes from a client who had approached us after his bank tied access to a mortgage with the requirement that he invest with them. They offered an assurance vie, which in itself can be a great tool. He was told there were no entry fees and a simple 1% annual management charge. That sounded reasonable until I read the small print. The 25-page document revealed:
- An entry fee of 2% on all funds – despite them being the bank’s own.
- Ongoing fund charges averaging 2.88% annually.
- An exit fee of up to 8%, which is reduced over eight years.
So, in year one, total charges were around 6%, and even after that, he was still paying roughly 4% annually, all without receiving any proper financial advice or ongoing support. The product looked clean on the surface but was weighed down with costs that seriously limited its long-term value.
The Real Cost of “Free” or “Cheap”
These stories aren’t unusual. In fact, we often see similar examples of it, particularly when banks and online platforms are promoting their investment products as low-cost or even free. When someone is promoting extremely low-cost products, it is essential to understand what that means.
Often, the fees they are quoting apply only to the “wrapper” product, such as an assurance vie, not to the underlying investments themselves. The funds held inside might carry their own charges, sometimes steep ones. These hidden costs are often layered, with each one looking small on its own, but adding up to a significant drag on your returns.
Without scrutiny, what looks like an efficient, low-cost option can turn out to be more expensive than expected. And since there is rarely anyone to explain or personalise the setup, it is easy to miss key risks, especially when it comes to tax, residency, or succession planning across borders.
What About UK Advisers?
We find that some British nationals living in France, or preparing to move, choose to keep their money managed by UK-based advisers. Familiarity is comforting, but there’s a problem: UK advisers aren’t trained in French tax law or regulation. That can cause real issues, even for simple things like pensions or ISA transfers.
If you are living in France or plan to be tax resident there, you need an adviser who is not only qualified to advise France, but who must give that advice according to French law. That includes rules around transparency, disclosure, and legal liability. You want someone who knows how to build a tax-efficient plan in France, not just in the UK.
So, What Should You Look For?
If you are paying for financial advice in France, look for someone who is independent, registered as a Conseil en Gestion de Patrimoine Certifié, and clearly explains their fees. They should provide detailed cost breakdowns for every product they recommend, including a DICI (the French version of a Key Investor Information Document), which shows the true annual charges, entry fees, and any exit penalties.
And always read the small print. If something doesn’t make sense, ask. If the answer is vague, that’s your answer.
Final Thought
Good financial advice should pay for itself, through better decisions, fewer mistakes, and long-term efficiency. But you should know exactly what you are paying for, and who’s getting paid. Whether you are managing your retirement income, relocating investments, or setting up an estate plan, transparency isn’t just a regulatory box to tick. It is how you know the advice is really for you.
At Kentingtons, we believe clear, independent, fully regulated advice is the only kind worth paying for.