how much do IFAs charge?

Laurence_WMF

What sort of rates do Independent Financial Advisers charge? Are they worth it?

How would I go about locating a good one? I have between £50,000 and £100,000 to invest.

Thanks,
Laurence

dunstonh

What sort of rates do Independent Financial Advisers charge?

Like any business it will vary. Some will be cheap, some very expensive. At worst its still typically cheaper/better than a bank.

Are they worth it?

Depends. If you can DIY then paying someone to to it will typically cost more than DIY. However, if you cant DIY but try and make a pigs ear of it then it can cost a massive amount more.

How would I go about locating a good one?

Word of mouth, local reputation mainly.

I have between £50,000 and £100,000 to invest.

Go agreed fee basis on that amount. It should be cheaper than commission.

greenface

dunstonh wrote: »

Like any business it will vary.
Word of mouth, local reputation mainly.



Go agreed fee basis on that amount. It should be cheaper than commission.

Dunstonh all great advice as usual what in your opinion(roughly) would be the amount to go commission and not agreed fee.

dunstonh

Dunstonh all great advice as usual what in your opinion(roughly) would be the amount to go commission and not agreed fee.

It depends on the fee. If you take a flat fee of £1000 compared against a commission of 3% Its about £33k as the break point. A £2000 fee (shouldnt be any more than that but aim to be no more than £1000), then its £60k where fee beats commission.

Advice that results in the purchase of investment does not incur VAT. If the advice includes pension then collecting the fee via the pension is tax efficient as you effectively get tax relief on the fee.

Laurence_WMF

Thanks Dunston, for the helpful advice. I still haven't really got a sense of what constitutes cheap, what expensive, though. Are the normal forms of payment a flat fee (at what point is this asked for? For how long does it retain the IFA's services?) or commission? Not an hourly rate for time engaged? Might an initial consultation be free?

Thanks again,
Laurence

dunstonh

Are the normal forms of payment a flat fee (at what point is this asked for? For how long does it retain the IFA's services?) or commission? Not an hourly rate for time engaged? Might an initial consultation be free?

There are different charging models. Some will be percentage based on amount invested. Some will have flat fee. Some will have a fee for each stage of the process. Some will have hourly rate. Some will offer a combination and allow you to pick. If you work on 3% as being the commission figure than anything less than that is better than commission. I would aim for £1500 or less.

First consultation is nearly always free. However, dont expect much from that other than perhaps background and maybe concepts and ideas and finding out if you have common ground that is worth going forward.

The IFA can provide servicing advice or transactional. Transactional is one off advice only. Servicing is where you employ them to provide ongoing advice and services (i.e. reviews, rebalancing, bed&ISA etc).

The title "IFA" only tells you that the firm can select products from across the marketplace. It doesnt tell you anything about their target market or their business model. There are many models available now.