Sterling ISA & Commision

GBY

I've had some financial advice recently and to cut a long story short I have been reccommended to join a Sterling Stocks and Shares ISA. In addition to annual fund charges there is, I quote, "an initial charge of 4.74% of each regular payment you make i.e £4.74. This pays for the initial commission and the costs incurred by Sterling."
Then a 0.25% trail commision on top of this.

Having read some threads on this alarm bells are ringing as to whether I would be paying over the odds for the commision?

dunstonh

Sterling give the adviser a choice of commission options but these do not impact on the cost of the product. In your case it looks like the adviser is forfeiting some of the natural trail and Sterling will be indemnifying some of that by increasing the initial.

The figures you mention equate to an equivalent 3% initial plus 0.5% trail which is the typical maximum. Is your business good enough to get a discount? 1.8% plus 0.5% is the market average for collectives. Smaller values where you dont have any other business with the adviser dont have much scope for discounting but if you use the adviser for other business or the values are higher, discounting is an option (as is fee basis)

dunstonh

Please do not mix up commission and charges. They are not directly linked. You are adding them on top of the charges where as they are paid from the charges.

I didnt say it was common either. The market average is nearly half and the charges equate to the typical maximum.

k8r4u

GBY wrote: »

I've had some financial advice recently and to cut a long story short I have been reccommended to join a Sterling Stocks and Shares ISA. In addition to annual fund charges there is, I quote, "an initial charge of 4.74% of each regular payment you make i.e £4.74. This pays for the initial commission and the costs incurred by Sterling."
Then a 0.25% trail commision on top of this.

Having read some threads on this alarm bells are ringing as to whether I would be paying over the odds for the commision?

Compare the cost of taking that advice to just buying an index tracker yourself and stuffing that in a S&S ISA, then decide. I think the answer is obvious but you might not agree.

Aegis

k8r4u wrote: »

Compare the cost of taking that advice to just buying an index tracker yourself and stuffing that in a S&S ISA, then decide. I think the answer is obvious but you might not agree.

I wouldn't personally want to put all my eggs in one basket like that, even for something as small as my ISA. I've got my ISA set up with a number of funds covering a large number of asset classes and geographic regions, and my own ISA contains no trackers at present.

I've selected my funds myself, but this may not suit everyone especially if the size of the investment is large enough to actually matter to them in the long run (again, unlike mine!). The added protection offered by the FSA for an upheld mis-sale complaint and the input of someone who works with funds on a daily basis can be more than worth the fees or commission taken.

In this case it's hardly black and white.