Octopus Investments co-founder Guy Myles has launched Flying Colours, a new firm offering remote advice services with lower charges.
But advisers have attacked the firm’s claims that it offers a service equivalent to full regulated advice at a lower cost.
The new firm will provide advice over the telephone and online.
The initial advice cost is between 0.5 per cent and 1.05 per cent.
Costs are derived from fund charges ranging from 0.11 per cent to 0.17 per cent, a 0.34 per cent platform charge and an ongoing financial advice charge of 0.54 per cent.
For people who hold “complex” investments there is a “variable” charge of up to 2 per cent, capped at £6,000.
The firm also claims a “traditional” IFA would, on average, charge 2.05 per cent, while a DIY broker would charge 1.25 per cent.
Flying Colours says it offers “all the benefits of traditional advice without huge associated costs”.
However, Informed Choice managing director Martin Bamford says the service is poor value for money, especially for sophisticated investors.
He says: “The 2 per cent variable fee for people holding complex investments or approaching retirement is in no way low cost, even if they are prepared to cap this at £6,000.
“What they charge for restricted advice should of course be lower cost than independent financial advice, especially as they will have lower overheads by not seeing their clients face-to-face.”
Investment Quorum chief executive Lee Robertson adds the service is “not massively different to much of what is available already”.