How to check out a IFA

feesarefare

div_ad wrote: »

feesarefare wrote: »

Rollinghome fyi, I was recently at a meeting in Birmingham where the other eleven firms attending have already adopted the post RDR regime with straightfoward fee structures and none of this nonsense of "fees" being a % of the amount invested.

Feesarefare I'd love to have a list of the12 firms who attended (I'm Birmingham based) becayse I just cannot find an advisor who wants to do other than work on a percentage basis (typically 1 to 1.5% up front and .5% per anum). As someone says they will do a hybrid deal about how that ios paid.

Did you look at the link in my last post?

div_ad

feesarefare I hadn't seen the post but have now looked it up.

With some trepidation I have filled in the enquiry form and await a phone call.

I must say that in talking to IFA's it has dawned on me that I need to clarify my own thoughts about what my 'lifestyle goals' are in order to get good advice, so this 'touchy feely' approach does strike some chords.

At present I feel that my experiences with Banks and IFA's have made me very (maybe overly) suspicious. This is to their disadvantage because a number of them have done work 'pitching' to me' for which they won't get paid, but also to mine because it's taken time, caused stress, and led to me maybe doing nothing instead of acting.

I should just say thanks to you, Dunston, Rollinghome, Linton and this forum I had started to think it was just me who thought their had to be a better way of approaching financial advice.

Divad

feesarefare

div_ad wrote: »

With some trepidation I have filled in the enquiry form and await a phone call.

Please report back on how you get on , good or bad . I am very interested in how you get on.

Divad - notice the link to alternative financial advisers been removed already , someone must have reported it for some reason. Its Ok to mention Hargreaves Landsdown though.

div_ad

Just reporting back on my experience so far as a result of contacting Alternative Fnancial Advisers which I am doing in search of the holy grail of an independent adviser who wants to do business in a different way than by collecting inital and trail commission, or charging on a % of fund basis and a yearly % management fee.

The first alternative is that it has taken from 25 June to 7 July for anyone to get back to me. This is way longer than anyone else has taken. In most cases hungry financial adviser types, be they independent or bank based, return my calls within 24 hours when they hear I have money to invest.

I've now been contacted by a company called DMP who seem to be a marketing/umbrella group who feed leeds to IFA's who are going to get someone on their list to contact me. The figure of 3% of the fund as a payment for advice and 1% a year has been mentioned. This isn't of course commission which is a bad thing.

I'm not optimistic that this is going to be different. Just a different marketing pitch and a different IFA.

smallfry27

Like you am looking for a new IFA, and have had some discussion already on another thread.

div_ad wrote: »

The figure of 3% of the fund as a payment for advice and 1% a year has been mentioned. This isn't of course commission which is a bad thing.

Oddly that's exactly the figures I have been quoted (though one quoted 0.5% pa). Others on this forum thought that was way too much but I haven't had any success in negotiating down. I think it must depend on how much you have and how much they want your business.

For my funds, 3% in first year, and .5% pa til 2013 works out almost the same as paying a smaller hourly fee for initial transfer but more for yearly advice thereafter. After 2013 it will all be fee-based anyway.

As far as I can tell, the fund managers automatically deduct their annual charges, and then pay the trail commission back to the adviser. Ethically this should be rebated if you opt to pay an hourly fee, but I'm not sure if the systems are in place to do this. So I will probably give in and go the commission route.

dunstonh

Oddly that's exactly the figures I have been quoted (though one quoted 0.5% pa).

Thats because it's the typical maximum for those working on commission.

Others on this forum thought that was way too much but I haven't had any success in negotiating down. I think it must depend on how much you have and how much they want your business.

Fee basis should be structured irrespective of how busy they are. Commission basis though could be adjusted to suit their requirements (and not yours).

div_ad

I have had a further contact now and my assumptions are correct.

I have been passed on to an IFA who is a member of Alternative Financial Advisers.

The business model appears very similar to other IFA's

Free initial meeting
Initial report (sometimes detailed sometimes very general - mostly free sometimes charged for)
Discussions about report and tweaks
Accept proposals
Set up fee (anything from 1% to 3% sometimes dependent on value of investment)
Ongoing fee for reviews and regular monitoring (0.5 to 0.75%)

As it happens this particular IFA sounded better than most, and was was more expensive than most.

Of course there is no telling if this translates to better advice.

Incidentally I should say that in my journey (as they would say on X factor) the IFA's I have spoken to have been in general pleasant, knowledgeable, reasonable and not pushy. They charge a lot for their services (and sales costs must be high). I think I am having problems with the financial system not the individuals lower down the food chain. I know its obvious but insurance bonds and fund management companies seem to have very high costs which become very noticeable at times of low returns.

dunstonh

The business model appears very similar to other IFA's

You keep looking at the commission option with each IFA. So, it would be similar as most product providers set the commission.

Remind us of the amount you are looking to invest. That would tell us if fee is likely to be better than commission.

They charge a lot for their services (and sales costs must be high).

Yes. The regulatory costs, software costs etc are significant. All the software we use is continuous licence (i.e. £x pm or p.a.). Software can cost £1000pm, Regulatory costs run into tens of thousands of pounds. A good assistant is expensive. It really ought to be cheaper than it is to give advice but the current system makes it hard if you want to do a good job.

I know its obvious but insurance bonds and fund management companies seem to have very high costs which become very noticeable at times of low returns.

Modern contracts are very good value. Indeed, may will have lower explicit charges than the implicit charges on savings. There are of course still products that are far too expensive.