Record repayment for bad financial advice

cepheus

Perhaps the solution would be for the IFA to allocate time and cost in proportion to quantity to be invested, say a minute per £1000. In practice someone with only 10k to invest is unlikely to have complex tax problems so it shouldn't take as long to deal with it. Even if one can't provide top quality advice in 10 mins surely this is far better than spending 1 hr on biased advice?

Rollinghome

jem16 wrote: »

You wouldn't have a clue what I believe or disbelieve. You're only interested in what you believe. etc., etc., etc.....

Sorry Jem, I really can't be bothered. Quite right, I haven't a clue what you believe and in your case I haven't the least interest. Has anyone? (Take that as rhetorical.) Read what I said again if you need to and if you can't understand the dictionary then get a grown-up to help you.

Rollinghome

jamesd wrote: »

Rollinghome, how does £100 fee, no commission (so annual charges of funds are reduced), no investment selection advice, for a personal pension seem to you as a charge?

Sorry James, I've no idea.

feesarefare

jem16 wrote: »

What would the average fee for implementation usually be?

£850-£1000

Presumably this offsetting would disappear after RDR?

If commission is banned on protection products

What platform do you use? Is there an initial/annual platform charge?

Elevate/Yes

The normal trail commission is 0.5%.

There is no trail. It has to be added by the adviser

If the investment is £180,000 this would equal £900. So at the moment anyone with less than £180,000 would be better off with trail commission? Perhaps this is what is meant by the less better off likely to be worse off after RDR?

Not sure what you mean better off compared to what, given the financial planning is given irrespective of how much money the client has?

For the clients though some will gain and some will lose. This is where choice is good but I fear this may be lost after RDR

But the choice only exists now because the bigger cases cross subsidise the smaller ones- its a flawed business model.

feesarefare

So presumably your costs are lower because you don't spend half your time trying to flog investment deals with catch-as-catch-can pricing that don't come off and has to be paid for by the punters that do buy? The "cross-subsidy" that Mr D referred to.

yes we have reduced our costs and removed the cross subsidy that appears to exist in most IFA businesses.

We used a national IFA business change consultancy who did an analysis of our business and they found that ours was very typical- 80% of our income came from 20% of our clients. So we made the decision to get rid of the 80% that made no money for us(and only got a service from us because of the other 20%) and replaced them with another 20% that are profitable.

Therefore 60% reduction in clients ( and work/overheads) and more time to give the 40% a much better service at a lower cost. :cool:

jem16

feesarefare wrote: »

Elevate/Yes

Axa Elevate? - let's hope it has a better reputation than its travel insurance side.

What are the initial/annual charges for the platform?

There is no trail. It has to be added by the adviser

I'm assuming you mean Elevate? I wasn't meaning that - I was meaning normal trail commission through having funds with the likes of Cofunds/Fidelity. However presumably those funds supermarkets will change the way the adviser is paid too?

Not sure what you mean better off compared to what, given the financial planning is given irrespective of how much money the client has?

I was meaning compared with what is available to them now as opposed to what is available after RDR.

EDIT : Perhaps not much will change after all from what dh is saying below.

jem16

dunstonh wrote: »

Its subjective as it depends on the fees you are compring it against. For example, a regional fee based only IFA around here has a minimum £2500 fee. So, if you compare the typical collectives maximum of 3%, you would have to invest more than £83,333 to be better off on fee basis compared to commission.

If you took the FSA average of 1.8% then you are looking at investments over £138,888

Thanks.

I assume not all IFAs will operate on a minimum of £2500 fee though? Or at least I hope not as there will be many more having to go to banks for investments.

dunstonh

jem16 wrote: »

Thanks.

I assume not all IFAs will operate on a minimum of £2500 fee though? Or at least I hope not as there will be many more having to go to banks for investments.

No. These ones are one of the larger regional ones operating through a regional accountant. I would suspect the average is much lower. However, it serves to highlight that fee basis itself does not guarantee value for money.

Knives dont kill people. People kill people. Knives when used correctly for purpose do the job required.

The RDR isnt really abolishing commission. It is abolishing provider set remuneration. If you go to an IFA and get advice, the charge for advice can still be collected via the product using the commission system. However, instead of the product provider setting the remuneration, the IFA will be. You won't have to write a cheque for the fee. So, for most people there will be little or no difference than before except that they will be agreeing the level of remuneration and signing a fee agreement saying what they are getting for it. Many IFAs have worked on agreed remuneration levels for quite a long time now. You can call it different names and present it in different ways but at the end of the day its the same thing.

feesarefare

Axa Elevate? - let's hope it has a better reputation than its travel insurance side.

so do I!

What are the initial/annual charges for the platform?

No initial , platform charges are percentage of funds on the platform and reduce the more you have on it. Funds are discounted as described earlier.

I'm assuming you mean Elevate? I wasn't meaning that - I was meaning normal trail commission through having funds with the likes of Cofunds/Fidelity. However presumably those funds supermarkets will change the way the adviser is paid too?

We move are clients from the platforms so its not an issue - doesnt cost the clients to move and reduces ongoing charges.

I was meaning compared with what is available to them now as opposed to what is available after RDR.

Our clients are already in the post RDR world so thats why I didnt follow your question?

EDIT : Perhaps not much will change after all from what dh is saying below

Advisers will call commission a fee instead - and be better qualified.

jem16

feesarefare wrote: »

No initial , platform charges are percentage of funds on the platform and reduce the more you have on it.

Sounds like the Transact platform. So the more you have the less you pay and the less you have the more you pay? You could describe that as cross-subsidy in the other direction.

Advisers will call commission a fee instead

You seem to be confirmimg it's really just a name change too.

and be better qualified.

That should be a good thing - coupled hopefully with experience too.

Thanks for your replies and the extra info.