Just how much is financial advice worth?

What's the right price for financial advice? According to the results of a survey out last week from CoreData Research, the answer is £39. That's the average price consumers say they are prepared to pay for an hour of advice. Financial advisers are horrified that anyone could think their time worth so little the standard assumption in the industry is that, once commission payments are finally outlawed by the Retail Distribution Review (RDR) in 2013, an hour with a good adviser should come in at a healthy £200.

But, as Nic Cicutti points out in Money Marketing, they shouldn't be surprised by the low figure. The fact that their charging structure has been based on opaque commission systems for so many decades means that most people have very little idea of the cost, or the worth, of financial advice.

Of those surveyed, 10% told CoreData they thought advice was always free and the rest clearly didn't stop to think of the preparation involved in giving advice or of the financial overheads advisers face. People know a lawyer costs something in the region of £150 an hour because there is an acknowledged going rate for a solicitor.

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Commission means that no one knows what the going rate for financial advice is or should be and too many people feel they get little from it anyway: in too many cases, "advisers somehow have failed to demonstrate any worth in their relationships with clients".

If they were good at what they do and, crucially, good at explaining what they do, this problem wouldn't exist: "if you speak to any good, competent financial adviser, they will tell you that once their clients understand what is being done for the fees they charge, very few balk at the amount they are being asked to pay".

Cicutti might be right but I have a feeling that the financial advice industry is about to be hit by more than just trouble squeezing fees out of people.

There is serious competition on the way in the form of online financial planners. We have long held that most people have relatively generic financial needs one 45-year-old man with an income of say, £40,000 to £70,000, a mortgage, a pension and an individual savings account (Isa) is, in financial terms, much the same as any other.

So it's possible for a computer to input the variables and give simple advice. Go to Moneyvista.com or Rplan.co.uk and you'll see this is exactly what is beginning to happen. Neither site fits the bill completely, but one that does can't be far behind. Financial advisers think it will be the RDR that destroys their profits. It might be that the internet does it first.