IFA charges

Ethelman

I posted a week or so back about IFA costs on my Skandia pension.
My IFA says he will charge me 3 per cent if I pay a lump sum into the pre-existing pension. So £300 on a £10k sum.
I don't want to bind the mouths of the kine that tread the grain, but I'd like to know what tasks he will perform for this- to a mere tyro, it seems to be no more than what he does every month.
So what costs- in general terms- does he incur.

This is a genuine question!

Velcro_Hotdog

Ethelman wrote: »

I posted a week or so back about IFA costs on my Skandia pension.
My IFA says he will charge me 3 per cent if I pay a lump sum into the pre-existing pension. So £300 on a £10k sum.
I don't want to bind the mouths of the kine that tread the grain, but I'd like to know what tasks he will perform for this- to a mere tyro, it seems to be no more than what he does every month.
So what costs- in general terms- does he incur.

This is a genuine question!

Time, report, research, paper, ink the list goes on

dunstonh

to a mere tyro, it seems to be no more than what he does every month.
So what costs- in general terms- does he incur.

In addition to above, there is also liability, regulatory costs and knowledge. £300 is barely worth the effort to be honest.

Ethelman

Velcro_Hotdog wrote: »

Time, report, research, paper, ink the list goes on

Thanks. I could understand most of those if it wasn't a direct slot-in- ie paying money in "normal proportions" into a set group of funds. So no research, and the report always seems to come from Skandia (praps it doesn't!)

In my fantasy world, computers do most of what is needed, so it's only a matter of keying in £10,000. But my fantasy world probably doesn't exist.

I guess his ink and paper must be pretty good quality.

Damask

An IFA can also incur various other charges not necessarily directly related to your transfer:

* Staff costs
* Office rental (and the heating, lighting, repair, furnishing, etc costs that go with it)
* Insurance costs (employer liability and professional liability)
* Travel costs (does the IFA go and visit his/her various clients at their home/office - this also involves fuel, car insurance, the car, etc)

The list of costs goes on and on... it may surprise some people that IFA's aren't just giving advice - they're running their own business.

Ethelman

dunstonh wrote: »

In addition to above, there is also liability, regulatory costs and knowledge. £300 is barely worth the effort to be honest.

I'm not knocking him!
I work in a service industry (the law) and am well aware of reg costs, liability etc. I just hadn't thought of them in this context.

That makes a bit more sense, thinking that way. Thanks!

djbdjb

Hi
Following on I'd appreciate any comments on my situation......I'm discussing with an IFA to invest 500k with 2% up front and 0.75% per year in some sort of collective managed fund. My feeling is these fees are high, but would apprecaite any advice / comments

jem16

djbdjb wrote: »

Hi
Following on I'd appreciate any comments on my situation......I'm discussing with an IFA to invest 500k with 2% up front and 0.75% per year in some sort of collective managed fund. My feeling is these fees are high, but would apprecaite any advice / comments

You'd be far better off finding an IFA who will charge a fee - £10k is far too high. 0.75% trail commission is also higher than the normal 0.5% - what are you getting for the extra?

What do you mean by collective managed fund?

djbdjb

Thanks.....yes , both initial and annual commisssion seemed high to me for the services of a ) setting up a portfolio and b) annual review/tweaking of the portfolio

The investment proposed is a collection of managed funds, so presumably additional fund managed fees are incurred internally there.

It's the IFA fees that seem high to me..maybe I'll look around a bit more

jem16

djbdjb wrote: »

The investment proposed is a collection of managed funds, so presumably additional fund managed fees are incurred internally there.

There can be higher charges associated with managed funds but that would be for the fund manager/s rather than the IFA. The part normally given to the IFA is usually 0.5%.

What funds were being proposed?

It's the IFA fees that seem high to me..maybe I'll look around a bit more

Seems sensible. Ask for a quote based on an initial fee. The review can also be a fixed retainer fee with the trail commission being rebated.

djbdjb

thanks...yes I think I'll look around for a fee based arrangement or at least a lower percentage ...1% up front and 0.5% seems reasonable to me.