Charges:1% a year will wipe out basic rate relief

whiteflag_3

EdInvestor wrote: »

I agree, advisors' charges for drawdown are often outrageous, how they can justify 3-5% of the fund for doing a transfer and a standard reinvestment beats me.

They obviously can , otherwise the client would walk away wouldnt they?

whiteflag_3

EdInvestor wrote: »

A lot of people seem to be going for ETFs.In a SIPP with the right fee structure this can be cost effective even for regukar investments.

TO help readers understand what you are saying , how many is "alot" exactly?

Not normally offered by IFAs of course

Correct - as you have been told umpteen times they are not authorised to recommend them.

EdInvestor

whiteflag wrote: »

.....they are not authorised to recommend them.

The FT puts it like this:

Independent financial advisers are not currently required to advise across the whole spectrum of investment products – but this is set to change from 2013, when commission is abolished and a clear divide between independent and restricted advisers is made.

It blames the lack of commission paid by ETF providers for the fact that two thirds of IFAs haven't recommended them to clients.
.....

http://www.ft.com/cms/s/2/cb0e6bf0-e0f9-11de-af7a-00144feab49a.html

IFAs usually also leave out investment trusts, much cheaper than unit trusts, also because they don't pay commission.So clients need to be aware that they are not being told about low cost investment options when consulting so-called independent advisors.For information on these products you need to come to websites like this one.

dunstonh

It blames the lack of commission paid by ETF providers for the fact that two thirds of IFAs haven't recommended them to clients.

It may say that but that is bad journalism. IFAs are able to recommend packaged products. They are not allowed to recommend direct investments (they are covered by stockbrokers).

The FSA have also not confirmed yet whether IFAs will be able to recommend direct investments from 2012. That is still under consultation. However, another part of the FSA has said that they believe there are too many products. So, increasing the range available is on the mind of one part of the FSA and reducing it is on the mind of another part.

IFAs usually also leave out investment trusts, much cheaper than unit trusts, also because they don't pay commission.

Which is totally inaccurate. If you cant do them, then you cant do them irrespective of what they pay.

So clients need to be aware that they are not being told about low cost investment options when consulting so-called independent advisors.

Even if they could do them, the cost would have to be factored in for the advice. Also, it would be wrong to assume ITs are better than UTs. There are enough reasons not to use ITs for the typical consumer.

jamesd

Almost the whole story is bad journalism. Any of those discussing this here could use similar product selection method to write a story with a headline that pensions are better than ISA even without the tax benefit by selecting an expensive ISA and inexpensive pension.

The impact of fees on results is the bit that's not bad, shame it's misleadingly couched in a pension vs ISA argument.

EdInvestor

IFAs can pick and choose what authorisations they want - that's why some IFAs (eg ones that charge a fee) will recommend ITs and ETFs.

http://www.moneyweek.com/investments/the-ifas-best-kept-secret.aspx

Check out an IFA before using him to see if he has ruled out the cheapest products before you even start.:(