any point in a broker?

Phoolgrrrl

Hi,

My dad is due to retire next year and wants to invest his lump sum in a managed fund. Is there any point in using a broker to pick which one to go for? I think they take around 5% of the sum. Do any of you have any reccomendations or pointers as to where to get info?

Thanks.

opinions4u

You should easily be able to recoup the 5% by using an IFA (not a tied / bank adviser) to find the right investment mix and the right tax wrappers for you.

www.unbiased.co.uk will help you find somebody local.

Ask about the different costs of fee charging or commission charging.

Reaper

If he doesn't know what to invest in then a broker/IFA might be useful. If so they will expect to be paid either by taking the commission or a flat fee (in which case they will refund you the commission).

Alternatively he can skip them if he knows what he wants to invest in. However if you just apply direct to the investment company they will still levy the charge, typically 5%, that would normally go to the broker and pocket it themselves. The way round that is to use a "discount broker". They will not give you any advise but will give you most of the charge back either as cash or added to the investment.

Read about discount brokers here:
http://www.moneysavingexpert.com/savings/isa-discounts

lisyloo

If you have no clue and pick a good broker who can advise on a good fund then yes there is a lot of point.

However I would advise he diversifies rather than puts it into one fund.

I hold cash, shares, property and gold.
My share ISAs are split between 15 funds and I have 5 pensions split across 2-4 funds each each.

So I would not suggest putting it into one fund.

lisyloo

{QUOTE]Ask about the different costs of fee charging or commission charging. [/QUOTE]

On our first ISA we paid £117.50 (£100 plus VAT) for advice (1999 price).
I think we got back about £300 per year for 10 years in rebates.

So although upfront fees are less attractive, it can be worthwhile.

Rollinghome

If your dad goes the adviser route he may be interested in this comparison of the different types of advice out there and some of the pitfalls: http://www.guardian.co.uk/money/2009/jun/21/financial-advisers-reviewed

And this should give him an idea of what's available for the cheaper DIY route: http://www.h-l.co.uk