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  • FIRST POST
    • chattykathyblue
    • By chattykathyblue 12th Mar 17, 2:28 PM
    • 42Posts
    • 7Thanks
    chattykathyblue
    Cost of an IFA
    • #1
    • 12th Mar 17, 2:28 PM
    Cost of an IFA 12th Mar 17 at 2:28 PM
    My husband had his initial consultation with an IFA as he has 3 works pensions and we weren't sure what to do with them for husband's retirement in 2 years time. The 3 pots combined come to about £450k. The IFA has recommended everything is transferred into a SIPP . The fee for transferring is 1.5% and then 0.65% for the IFA and an additional 1.95% annually for the Discretionary Fund Manager the IFA uses. Does this seem reasonable?
    TIA
Page 1
    • TheTracker
    • By TheTracker 12th Mar 17, 2:57 PM
    • 1,125 Posts
    • 1,116 Thanks
    TheTracker
    • #2
    • 12th Mar 17, 2:57 PM
    • #2
    • 12th Mar 17, 2:57 PM
    So I make that about £18,500 in the first year.

    Reckon that before spending that sort of money you should consult an IFA.

    Oh, hang on ...

    https://www.moneymarketing.co.uk/issues/16-february-2017/04-05-and-06-living-the-high-life-whats-behind-the-rise-in-adviser-pay/
    Last edited by TheTracker; 12-03-2017 at 3:00 PM.
    • xylophone
    • By xylophone 12th Mar 17, 3:04 PM
    • 23,477 Posts
    • 13,652 Thanks
    xylophone
    • #3
    • 12th Mar 17, 3:04 PM
    • #3
    • 12th Mar 17, 3:04 PM
    Are you able to DIY?

    http://monevator.com/find-the-best-online-broker/
    • dunstonh
    • By dunstonh 12th Mar 17, 3:05 PM
    • 89,606 Posts
    • 56,103 Thanks
    dunstonh
    • #4
    • 12th Mar 17, 3:05 PM
    • #4
    • 12th Mar 17, 3:05 PM
    The fee for transferring is 1.5% and then 0.65% for the IFA and an additional 1.95% annually for the Discretionary Fund Manager the IFA uses. Does this seem reasonable?

    1.5% initial on £450k is high. Its great on £100k but unless it is a defined benefit scheme, you should be looking for less than that.

    0.65% p.a. is high. The most dominant figure is 0.5% p.a. It is typical to see 1% p.a. on small values but that usually tapers away as the value gets higher. Also, that also tends to be where the IFA is doing the investment work. In this case, the IFA is not doing the investment work. So, what are you paying them extra for?

    So, overall, it seems very very expensive. It would not be difficult to find it cheaper.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • chattykathyblue
    • By chattykathyblue 12th Mar 17, 3:27 PM
    • 42 Posts
    • 7 Thanks
    chattykathyblue
    • #5
    • 12th Mar 17, 3:27 PM
    • #5
    • 12th Mar 17, 3:27 PM
    Originally posted by xylophone
    I really don't think we could or would want to. We don't mind paying someone but obviously don't want to pay over the top

    thank you
    • chattykathyblue
    • By chattykathyblue 12th Mar 17, 3:28 PM
    • 42 Posts
    • 7 Thanks
    chattykathyblue
    • #6
    • 12th Mar 17, 3:28 PM
    • #6
    • 12th Mar 17, 3:28 PM
    1.5% initial on £450k is high. Its great on £100k but unless it is a defined benefit scheme, you should be looking for less than that.

    0.65% p.a. is high. The most dominant figure is 0.5% p.a. It is typical to see 1% p.a. on small values but that usually tapers away as the value gets higher. Also, that also tends to be where the IFA is doing the investment work. In this case, the IFA is not doing the investment work. So, what are you paying them extra for?

    So, overall, it seems very very expensive. It would not be difficult to find it cheaper.
    Originally posted by dunstonh
    Thank you for your reply. It's obvious we need to look elsewhere
    • xylophone
    • By xylophone 12th Mar 17, 3:36 PM
    • 23,477 Posts
    • 13,652 Thanks
    xylophone
    • #7
    • 12th Mar 17, 3:36 PM
    • #7
    • 12th Mar 17, 3:36 PM
    Have you and your husband obtained state pension statements?

    https://www.gov.uk/yourstatepension?utm_source=Mail-Online&utm_medium=Partnership&utm_campaign=GTKY

    Might it be worth considering a DIY transfer to a SIPP and holding the money in cash while you find an IFA to advise on initial choice of funds with the option of an annual review?

    https://directory.moneyadviceservice.org.uk/en

    http://www.hl.co.uk/partners/search/sipp?theSource=PCHLS&Override=0&adg=G+HLBS+HLS&gcl id=CJLAwLOl0dICFeUp0wod-xAHGw

    http://www.thisismoney.co.uk/money/pensions/article-3646973/How-invest-pension-drawdown-12-step-starters-guide.html
    • sandsy
    • By sandsy 12th Mar 17, 4:48 PM
    • 1,218 Posts
    • 715 Thanks
    sandsy
    • #8
    • 12th Mar 17, 4:48 PM
    • #8
    • 12th Mar 17, 4:48 PM
    So 2.6% in advice and product charges.
    If inflation was 2.5%pa, you'd need to earn 5.1%pa, year in year out, just for your fund to retain the same buying power as it has today.

    And that's ignoring the initial advice cost.
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