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  • FIRST POST
    • fisibs
    • By fisibs 17th Mar 17, 10:54 AM
    • 6Posts
    • 1Thanks
    fisibs
    IFA charges?
    • #1
    • 17th Mar 17, 10:54 AM
    IFA charges? 17th Mar 17 at 10:54 AM
    Hello, I'd be very grateful for some sound practical advice, but keep it simple! Financial jargon is confusing and intimidating (ie, what is a tax wrapper?!)

    I opened a S&S ISA through an Independant Financial Advisor 5 years ago. It's grown slightly, but they're now recommending changing it to a different portfolio provider, and adding more savings (which I have languishing in a very poor basic savings account). However there will be a charge for this, plus annual fees thereafter. The fee is minimal but I object to paying charges and fees for my savings! Would it be worth finding another IFA for a 2nd opinion? All I want is a decent fee-free return on my hard-earned saved money..... Would I, in fact, be better off, finding a good cash ISA and setting it up myself? Also, what's the investment limit on cash ISAs, how many can you have?

    Any advice would be much appreciated.

    Thanks
Page 1
    • dunstonh
    • By dunstonh 17th Mar 17, 11:03 AM
    • 87,285 Posts
    • 52,435 Thanks
    dunstonh
    • #2
    • 17th Mar 17, 11:03 AM
    • #2
    • 17th Mar 17, 11:03 AM
    The fee is minimal but I object to paying charges and fees for my savings!
    Everything has charges. Even savings accounts. Some you see. Some you dont. No-one is doing this out of love.

    Would it be worth finding another IFA for a 2nd opinion?
    No. If you don't want to pay explicit charges then no IFA is going to be of use to you.

    All I want is a decent fee-free return on my hard-earned saved money..
    Put it in a savings account then. It wont be fees free as savings have higher charges than investments. However, you cant see the charge on the savings and that will make you feel better. You can then earn 1% with no explicit charge instead of say 5% after 1% charge.

    Would I, in fact, be better off, finding a good cash ISA and setting it up myself?
    Probably. You wont make as much but you will feel better.

    Also, what's the investment limit on cash ISAs, how many can you have?
    £15240 and as many as you like as long as you only contribute one per tax year.
    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 a Financial Adviser local to you.
    • JohnRo
    • By JohnRo 17th Mar 17, 11:05 AM
    • 2,250 Posts
    • 1,986 Thanks
    JohnRo
    • #3
    • 17th Mar 17, 11:05 AM
    • #3
    • 17th Mar 17, 11:05 AM
    It sounds to me like they're churning your account. It's a real shame you've only seen slight gains over the last five years though, assuming you're holding equity investments.

    How much and what is in the S&S ISA?

    What are the current IFA charges and the new ones they're proposing?
    'We can't solve problems by using the same kind of thinking we used when we created them.' ― Albert Einstein
    'Facts do not cease to exist because they are ignored.' ― Aldous Huxley
    • ermine
    • By ermine 17th Mar 17, 6:24 PM
    • 529 Posts
    • 744 Thanks
    ermine
    • #4
    • 17th Mar 17, 6:24 PM
    • #4
    • 17th Mar 17, 6:24 PM
    How much is in it? What return have you achieved over 5 years? When you compare it with the FTSE100 total return (very vaguely approximated by this do you feel happy or sad). If happy, eat the fees, if sad, read this

    There's nothing wrong in paying an IFA, but if you come out not quite sure why the hell you've been paying him and whether that was a good idea or not then he's not the right IFA for you The whole point of a IFA is to educate you as to whether your results are broadly likely to match your proposed actions.

    Markets have been on a tear looked at over the last 5 years. You should have got some of that!
    • fisibs
    • By fisibs 18th Mar 17, 4:40 PM
    • 6 Posts
    • 1 Thanks
    fisibs
    • #5
    • 18th Mar 17, 4:40 PM
    • #5
    • 18th Mar 17, 4:40 PM
    Thanks for yr reply.
    Initially invested £20,000 with Old Mutual Wealth portfolio which has eventually, after an initial drop, grown to just over £23,000 in 5 years. IFA has prepared new portfolio to an Aviva platform, to transfer the £23000 plus the ISA max of £15240 from savings acc. . IFA fee for this work, £295, plus 0.5% per annum based on the portfolio's value. Aviva's annual mgt chefs, 0.69%.
    • fisibs
    • By fisibs 18th Mar 17, 4:41 PM
    • 6 Posts
    • 1 Thanks
    fisibs
    • #6
    • 18th Mar 17, 4:41 PM
    • #6
    • 18th Mar 17, 4:41 PM
    *charges, not chefs!
    • dunstonh
    • By dunstonh 18th Mar 17, 5:06 PM
    • 87,285 Posts
    • 52,435 Thanks
    dunstonh
    • #7
    • 18th Mar 17, 5:06 PM
    • #7
    • 18th Mar 17, 5:06 PM
    OMW was not a bad option for small investments prior to 2013. However, with the RDR, they had to move to explicit charging and whilst they are better on larger investment on their new pricing they are not that good on smaller ones.

    IFA has prepared new portfolio to an Aviva platform, to transfer the £23000 plus the ISA max of £15240 from savings acc.
    That is a much better option for small investments and the advice would be easily justifiable.
    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 a Financial Adviser local to you.
    • BananaRepublic
    • By BananaRepublic 18th Mar 17, 7:24 PM
    • 784 Posts
    • 535 Thanks
    BananaRepublic
    • #8
    • 18th Mar 17, 7:24 PM
    • #8
    • 18th Mar 17, 7:24 PM
    Thanks for yr reply.
    Initially invested £20,000 with Old Mutual Wealth portfolio which has eventually, after an initial drop, grown to just over £23,000 in 5 years.
    Originally posted by fisibs
    Sorry but that is absolutely pathetic, I would tell the IFA where to go, they are a bunch of useless so and sos. I have had better in one year! Go to YouInvest.co.uk, and use their fund comparison tool to compare funds. I feel embarrassed that you have been given such bad advice.

    IFA has prepared new portfolio to an Aviva platform, to transfer the £23000 plus the ISA max of £15240 from savings acc. . IFA fee for this work, £295, plus 0.5% per annum based on the portfolio's value. Aviva's annual mgt chefs, 0.69%.
    Originally posted by fisibs
    I would tell them where to go, they sound like a bunch of worthless rotters. People here often recommend the Vanguard Life Strategy 100% fund, you'd do bettter to invest in that. Of course there are alternatives, but compared to the rotten advice you've had, it's good. I could recommend other funds, but the YouInvest tools are good enough.
    • bowlhead99
    • By bowlhead99 18th Mar 17, 8:18 PM
    • 6,182 Posts
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    bowlhead99
    • #9
    • 18th Mar 17, 8:18 PM
    • #9
    • 18th Mar 17, 8:18 PM
    Sorry but that is absolutely pathetic, I would tell the IFA where to go, they are a bunch of useless so and sos. I have had better in one year!
    Originally posted by BananaRepublic
    While it does not sound like a very good return at all, it is nonsense to say that it is a bad return purely because your return on high risk investments did over 15% in a year and his/hers didn't.

    I am speculating of course, but presumably the IFA asked the OP - who was putting a large chunk of cash into investment funds (perhaps for the first time, given they are on the forum talking from what sounds like a position of inexperience) - how he felt about different levels of potential risk and volatility. The OP very likely said he did not want a high equities portfolio and was more about capital preservation. For example he is talking about returns on his savings, and cash ISAs.

    So, while the return is poor, and the fees may have been quite high relative to the rate of return - comparing to what you got in your equities-heavy and international-heavy portfolio, is silly.

    I would tell them where to go, they sound like a bunch of worthless rotters. People here often recommend the Vanguard Life Strategy 100% fund, you'd do bettter to invest in that. Of course there are alternatives, but compared to the rotten advice you've had, it's good.
    Yes. They are rotters and you should take the advice from Bananarepublic and put all the proceeds into a fund that invests the existing £23k and your new money into global equities with a loss potential of 50% in any given year. That's a great idea, and not at all stupid for a cautious investor.

    That advice from BananaRepublic is personalised and tailored to your goals and needs, and if it turns out to be inappropriate you can complain to the Ombudsman and get a pay out from him or his professional indemnity insurance, as he is a regulated professional and has some sort of duty of care towards you and your wellbeing.

    Oh wait, no he isn't. So disregard that last paragraph, it is just sarcasm-riddled banter.
    I could recommend other funds, but the YouInvest tools are good enough.
    Good enough if you know what you are doing and want to screen funds simplistically, based on what returns and volatility they had in the last three years - ignoring the decade and a half before that which included two massive market crashes.

    Certainly good enough if all you want to do is click on a fund name and get a pretty chart of what a nice return it made over the last five year "bull market" during global economic conditions which are unlikely to prevail over the next five years.

    Beware advice from well meaning people who have a lot more money and capacity for loss than you do combined with more experience. What is fine for them is not necessarily fine for you.

    FWIW, I have one of my pensions through Youinvest too and their service is absolutely fine if you want to DIY. And the above comments are not to imply that your IFA is fantastic, or great value for money. But the sad fact is that to invest only £20k it's unlikely to be worth many people's time to provide you advice if you're only willing to pay a small advice fee, because providing regulated investment advice is an expensive business.

    So you are not going to get low advice fees, because they don't exist in the world of tailored personal advice. At a few hundred quid for an advised solution, the advisor is not getting rich. Unfortunately to you, with a small pot of money, it will seem quite pricy.

    You could do a decent amount of research and then buy a multi-asset fund meeting your risk preferences, from a fund supermarket, on a DIY basis. Or maybe try robo-advice which is not properly tailored to your circumstances but can be reasonably low cost and can help to pick a pigeon-hole of what risk level you want to sit in.
    • dunstonh
    • By dunstonh 18th Mar 17, 9:22 PM
    • 87,285 Posts
    • 52,435 Thanks
    dunstonh
    Sorry but that is absolutely pathetic,
    not necessarily. The investments may be say risk 2/3 on a 1-10 scale. i.e. little more than cash.

    Last time someone said their return was that low and pathetic, it turned out they were taking income and drawing the yield. So, it would be nice to know more about what is held first.
    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 a Financial Adviser local to you.
    • fisibs
    • By fisibs 18th Mar 17, 11:43 PM
    • 6 Posts
    • 1 Thanks
    fisibs
    Thank you all, clearly you know far more than me! Yes I am new to this, and as a result, chose a low - to - medium risk approach with the OMW portfolio 5 years ago. Perhaps I'll 'up' the risk level with the new Aviva one and see what happens. I'm certainly not knowledgeable enough (yet) to go it alone and find my best investment option at the moment, so will go with this new portfolio through the IFA, and do much reading in the meantime. ... I intend to keep this investment going for the foreseeable future, at least until retirement age, in 16 years (currently 51, mother, and mortgage-free) but plan to learn as much as possible about the world of investments, so I can improve the returns in the future.
    • BananaRepublic
    • By BananaRepublic 19th Mar 17, 7:40 AM
    • 784 Posts
    • 535 Thanks
    BananaRepublic
    While it does not sound like a very good return at all, it is nonsense to say that it is a bad return purely because your return on high risk investments did over 15% in a year and his/hers didn't.
    Originally posted by bowlhead99
    No, the return was pants on the 5 year timescale, but do feel free to make a stupid comment.

    I am speculating of course, but presumably the IFA asked the OP - who was putting a large chunk of cash into investment funds (perhaps for the first time, given they are on the forum talking from what sounds like a position of inexperience) - how he felt about different levels of potential risk and volatility. The OP very likely said he did not want a high equities portfolio and was more about capital preservation. For example he is talking about returns on his savings, and cash ISAs.

    So, while the return is poor, and the fees may have been quite high relative to the rate of return - comparing to what you got in your equities-heavy and international-heavy portfolio, is silly.


    Yes. They are rotters and you should take the advice from Bananarepublic and put all the proceeds into a fund that invests the existing £23k and your new money into global equities with a loss potential of 50% in any given year. That's a great idea, and not at all stupid for a cautious investor.

    That advice from BananaRepublic is personalised and tailored to your goals and needs, and if it turns out to be inappropriate you can complain to the Ombudsman and get a pay out from him or his professional indemnity insurance, as he is a regulated professional and has some sort of duty of care towards you and your wellbeing.

    Oh wait, no he isn't. So disregard that last paragraph, it is just sarcasm-riddled banter.

    Good enough if you know what you are doing and want to screen funds simplistically, based on what returns and volatility they had in the last three years - ignoring the decade and a half before that which included two massive market crashes.

    Certainly good enough if all you want to do is click on a fund name and get a pretty chart of what a nice return it made over the last five year "bull market" during global economic conditions which are unlikely to prevail over the next five years.

    Beware advice from well meaning people who have a lot more money and capacity for loss than you do combined with more experience. What is fine for them is not necessarily fine for you.

    FWIW, I have one of my pensions through Youinvest too and their service is absolutely fine if you want to DIY. And the above comments are not to imply that your IFA is fantastic, or great value for money. But the sad fact is that to invest only £20k it's unlikely to be worth many people's time to provide you advice if you're only willing to pay a small advice fee, because providing regulated investment advice is an expensive business.

    So you are not going to get low advice fees, because they don't exist in the world of tailored personal advice. At a few hundred quid for an advised solution, the advisor is not getting rich. Unfortunately to you, with a small pot of money, it will seem quite pricy.

    You could do a decent amount of research and then buy a multi-asset fund meeting your risk preferences, from a fund supermarket, on a DIY basis. Or maybe try robo-advice which is not properly tailored to your circumstances but can be reasonably low cost and can help to pick a pigeon-hole of what risk level you want to sit in.
    Originally posted by bowlhead99
    I don't think that rambling, sarcastic, scornful rant deserves much in the way of comment, it certainly was not constructive. It highlights why you need to be careful when dealing with 'online experts' such as yourself.
    • zagfles
    • By zagfles 19th Mar 17, 8:08 AM
    • 11,624 Posts
    • 9,607 Thanks
    zagfles
    Thanks for yr reply.
    Initially invested £20,000 with Old Mutual Wealth portfolio which has eventually, after an initial drop, grown to just over £23,000 in 5 years.
    Originally posted by fisibs
    That really is pathetic, a return of under 3%pa. I've done better with my cash ISAs !! Suggest you get the IFA to explain the pathetic performance during a time when equities have increased substainially. Even low risk investments should have done far better.
    • HappyHarry
    • By HappyHarry 19th Mar 17, 8:13 AM
    • 319 Posts
    • 378 Thanks
    HappyHarry
    £3000 over five years does seem very low, even for a very low risk fund.

    Would the OP be prepared to name the fund they are invested in?

    Has the OP taken any dividends / income from the fund?
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
    • BLB53
    • By BLB53 19th Mar 17, 8:51 AM
    • 1,003 Posts
    • 810 Thanks
    BLB53
    IFA fee for this work, £295, plus 0.5% per annum based on the portfolio's value. Aviva's annual mgt chefs, 0.69%
    You will never make much return paying 2% of your new money to the ifa (+ vat no doubt) and then a further 0.5% (+ vat) on all of your investment + the charges for your platform provider and funds...

    It is no so difficult to diy - as ermine says earlier, read up on the likes of Monevator - all you really need is a low cost platform like AJ Bell Youinvest or Charles Stanly Direct and invest your hard earned savings in Vanguard Lifestrategy 40 (40% global equities/60% bonds) and thats it - check your statement at the end of the year - total fees of less than 0.5% all-in...or you can keep giving your money to your IFA.
    "A low-cost index tracker is going to beat a majority of the amateur-managed money or professionally managed money" Warren Buffett
    • bowlhead99
    • By bowlhead99 19th Mar 17, 9:21 AM
    • 6,182 Posts
    • 10,887 Thanks
    bowlhead99
    While it does not sound like a very good return at all, it is nonsense to say that it is a bad return purely because your return on high risk investments did over 15% in a year and his/hers didn't.
    Originally posted by bowlhead99
    No, the return was pants on the 5 year timescale, but do feel free to make a stupid comment.
    Originally posted by BananaRepublic
    There is nothing stupid about an observation that one person's return over a five year timescale (what the OP got on their low risk investments) may be beaten by another person's return over one year (what you got) when they have different objectives and are willing to take different risks.

    I don't think that rambling, sarcastic, scornful rant deserves much in the way of comment, it certainly was not constructive. It highlights why you need to be careful when dealing with 'online experts' such as yourself.
    If we take out what has offended you we could distill it as:

    - there are a massive variety of risk levels out there and different people have different objectives; funds suitable for one person might not be suitable for another. Person A's return that was designed to produce a return with low volatility should not be compared with Person B's return which was set up for different objectives. Comparing returns of cash or gilts with return of international equities in a bull market does not allow you to conclude that cash or gilts was inappropriate just because the returns are lower. They are supposed to be lower in a bull market and you did not know five years ago it was going to be a bull market.

    - It is ridiculous to castigate a firm of advisors as 'rotters' after they spent time with you assessing your risk and concluded you should not be in a fund that would suffer wild swings and be set up for high returns, and recommended something very cautious instead. Your returns on what you invested depend on what it was invested in, and whether their fees were taken from the amount you invested rather than being paid separately, but they are not bad guys for charging you a fee nor for recommending funds with low return prospects just because with hindsight you'd have got more from a funds with high return prospects. The ones with greater prospects have greater risk on a sliding scale.

    - If someone (or you yourself), has assessed one of your objectives to be a low risk of loss it would be exceedingly unwise to listen to an anonymous stranger on the internet who gloats that your return is pathetic over five years compared to his return in one year and suggests a fund invested in global equities offering greater than 50% loss potential over a year or two. The stranger behind the screen name says that would be a good fund compared to the rotten advice you have had. But he's not a regulated professional and has no duty of care towards you and you have no comeback when the fund loses the 50% which it will do at some point.

    - Although you can do simplistic screening off the tools available at Morningstar/Youinvest, you do need to know what you are doing to get good results and you should make sure your research is not geared to finding the funds in a 'league table' that have done well in a relatively short period where many funds outperformed their long term norms.

    - Although you may feel that you object to paying fees for managing or advising on your hard-earned savings, it is a fact of life that you must pay if you do not want to do it yourself. Investing small amounts of money (compared to how much some people have) means that the advice will be costly per pound invested. A fee of a few hundred pounds that is large to you (in the context of the amount you are investing) is not large to the independent financial advisor (in the context of the work he has to do to create and run a business which is in a position do provide the advice, and then go ahead and meet with you and actually provide the advice).

    - If you do not want to continue to pay fees for personalised advice, options include doing a decent amount of your own research to understand differences in risk profiles of individual multi-asset funds which might be suitable for your needs and could be bought via a fund supermarket. Or using one of the newer 'robo advice' offerings which charge on a percentage basis for putting you into the portfolio that their software says is suitable for the pigeon-hole into which you fit on their risk/reward scale.


    -
    BananaRepublic may say that the above points which were all generally being made in the previous post are "certainly not constructive" but perhaps that is because he is a little sensitive to criticism or sarcasm and therefore unwilling to understand how the points which contradict his own might be helpful to others
    Last edited by bowlhead99; 19-03-2017 at 9:23 AM.
    • zagfles
    • By zagfles 19th Mar 17, 9:42 AM
    • 11,624 Posts
    • 9,607 Thanks
    zagfles
    There is nothing stupid about an observation that one person's return over a five year timescale (what the OP got on their low risk investments) may be beaten by another person's return over one year (what you got) when they have different objectives and are willing to take different risks.
    Originally posted by bowlhead99
    Your usual long ramble misses the point. The return is rubbish even for a very low risk investment. As even an IFA has pointed out above.
    • fisibs
    • By fisibs 19th Mar 17, 10:36 AM
    • 6 Posts
    • 1 Thanks
    fisibs
    "£3000 over five years does seem very low, even for a very low risk fund.

    Would the OP be prepared to name the fund they are invested in?

    Has the OP taken any dividends / income from the fund?"

    Hello Harry, the fund is with Old Mutual Wealth, called Troy Trojan-U (inc). No, I haven't taken any dividends or income from it.
    • bowlhead99
    • By bowlhead99 19th Mar 17, 10:37 AM
    • 6,182 Posts
    • 10,887 Thanks
    bowlhead99
    Your usual long ramble misses the point. The return is rubbish even for a very low risk investment. As even an IFA has pointed out above.
    Originally posted by zagfles
    The first IFA to respond to BR's comment that 'the return is pathetic and the advisors are rotters' said that the return is not necessarily pathetic.

    The second IFA said 'the return does seem very low' and requested more information.

    Both of those are not the same as saying "the return is rubbish and bowlhead's comments miss the point". Bowlhead agreed that the returns were low and offered a variety of comments which you and Banana dismissed because they were embedded in a "ramble". The learning point is probably for Bowlhead to be more concise. However, we all have our preferred communication styles.


    Hello Harry, the fund is with Old Mutual Wealth, called Troy Trojan-U (inc). No, I haven't taken any dividends or income from it.
    Originally posted by fisibs
    Trojan is a well established fund with £4bn under management, managed by a conservative manager who focuses on positioning for capital preservation ahead of gains, within its remit to generate capital and income returns. It has been well regarded in the past but has obviously done poorly compared to funds that don't have that remit in the last five years when some sectors have produced stellar results.

    The cheapest class of that fund has done around 29% return in the last five years (you would have to pay a platform fee on top, to be able to hold that class). The more expensive class including kickback to advisor and platform has higher running costs and would have been more like 24% (assuming no initial fee) which would turn £20k into somewhere between £24.5-25k.

    However, if there had been an additional initial fee (from advisor or as an offer-to-bid spread from the investment manager) the starting pot would not have really been as high as £20k and you might expect the value now to be around £24k, or maybe even lower if there were other ongoing fees. It sounds like that is perhaps the case (especially if the fund is an 'inc' version which generates dividend payments and the investor has not been taking any of that income for themselves).

    Has the annual dividend income been reinvested into the investment, or is there some cash on account in the OMW platform in addition to the 'just over £23k' of investment?
    Last edited by bowlhead99; 19-03-2017 at 11:05 AM.
    • zagfles
    • By zagfles 19th Mar 17, 11:37 AM
    • 11,624 Posts
    • 9,607 Thanks
    zagfles
    The first IFA to respond to BR's comment that 'the return is pathetic and the advisors are rotters' said that the return is not necessarily pathetic.
    Originally posted by bowlhead99
    I wasn't referring to that comment, which is pretty obvious. I said "an", not both, so why do you mention both?
    The second IFA said 'the return does seem very low'
    You missed "even for a very low risk fund".
    and requested more information.
    Now provided. Including that no income withdrawal was made.
    Both of those are not the same as saying "the return is rubbish and bowlhead's comments miss the point".
    My third sentence was referring to my second.

    "...does seem very low, even for a very low risk fund." and "...is rubbish even for a very low risk investment" are slightly different. But then, we all have our own posting styles, don't we?
    Last edited by zagfles; 19-03-2017 at 11:39 AM.
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