The fair value assessment: a six-step framework for advice firms
A fair-value assessment at advice-firm scale is not a pricing review. It is a six-step walkthrough that ends in a documented value justification for this client.
What the FCA says about fair value
The price and value outcome (PRIN 2A.4) asks whether the price the client pays is justified by the value they receive — the benefits of the product or service, including any ongoing charges, are in scope. The FCA's Consumer Duty pages set that expectation out in full, and the rule explained check by check walks the checks at file level.
The FCA's fair-value framework review — held in the Consumer Duty publications library — keeps pointing at the same gap: assessments exist, but they do not always make it into the file.
The six steps
The assessment walks a single question in six steps. Each step produces something the file must show.
- 1
Pricing
What the client pays — initial and ongoing charges, explicitly, in terms they can understand.
- 2
Benefits
What the client receives for that price: the service, the product, the ongoing advice.
- 3
Alternatives
What else was available — named and compared, with the reason this one was chosen.
- 4
Target market
Whether this client fits the product's intended market, or whether the fit relies on adjustments.
- 5
Value justification
Why this product, at this cost, for this client — the value-for-money paragraph in file terms.
- 6
Documentation
The whole assessment recorded in the file so a reviewer reading cold can follow it.
The price and value outcome (PRIN 2A.4) asks whether the price is justified by the value. The assessment walks that question file by file — and the documentation makes the answer evidence.
Worked example: the assessment, one file
One recommendation, two records. Compare how the same file read before and after the assessment (anonymised, illustrative).
Before
“Platform A. Ongoing charge: 0.75% of the portfolio.” — a percentage charge, no alternatives named, and no note of the value delivered.
After
“Price in pounds: initial and ongoing. Benefits tied to the client's objectives. Alternatives named and compared, with the reason each was rejected. Target-market fit confirmed. Value justification recorded. Documentation a reviewer can follow cold.”
Common mistakes in the assessment
- A pricing review called an assessment. Rebuilding the charge sheet is not the same as justifying price against value for this client.
- Alternatives omitted or left generic. An un-named market comparison cannot be checked; the file needs named alternatives and the reason they were rejected.
- Value described to the market, not the client. Product features listed without the link to this client's objectives do not answer the fair-value question.
- An assessment that never becomes documentation. The thinking that stays in the adviser's head is not evidence; the walkthrough only counts when the file shows it.
The assessment at a glance
| Step | What it produces | Evidence in the file |
|---|---|---|
| Pricing | The price in pounds, initial and ongoing | A charge line a reviewer can find |
| Benefits | What the client receives for the price | Benefits tied to the client's objectives |
| Alternatives | Alternatives named and compared | The rejection reason recorded |
| Target market | Fit confirmed or adjusted | The client noted against the product's market |
| Value justification | Why this product, at this cost, for this client | The value-for-money paragraph |
| Documentation | The assessment recorded, readable cold | A chain a reviewer can follow |
Related reads
This is the walkthrough side of fair value — start at the fair value hub for the full silo, see the file-level value paragraph for how the value justification lands in a recommendation, and the ongoing-charge log fields for how the value keeps being evidenced over time.
Frequently asked questions
Does every advice file need a full fair-value assessment?
Every recommendation needs the evidence the assessment produces: the price, the benefits, the alternatives, the target-market fit, and the value justification. The six-step walkthrough is the disciplined way to get that evidence into the file.
Is fair value only about the price?
No. Fair value compares the price with the benefits the client receives, which is why the assessment covers benefits, alternatives, and target-market fit as well as pricing. The fair-value framework review looks at the whole picture.
Who should sign off the assessment?
The person who makes the recommendation, with the documentation reviewed as part of the suitability check. The file has to show judgment, not just a completed form.
Your next step
Run the six steps on one recommendation before it reaches the client: name the price in pounds, the benefits, the alternatives, and the value justification in the written file. Proven Duty's file review checks these fields and flags the gaps. Start with a free trial or see pricing.