Do You Need Financial Advice? When To Get It, When Not To Get It Discussion Area 20 October 2006 at 11:54AM edited 30 November -1 at 1:00AM in Savings & Investments 289 replies 69.3K views

saverjustice

Annuity Direct?

What do you mean by "the right protection"?

dunstonh

Is this arrangement the norm or would most IFAs offer an hourly fee for one-off advice and setting up the investments, which is what we need? He is not going to be interested in investments that involve much risk. He just needs to maximise his income from the lump sum. Any advice much appreciated.

Its high compared to the norm. Indeed, its very high. Many IFAs would just be interested in the servicing 0.5% p.a. on a sum of that size and would have very little initial. Transactional advisers (no servicing) would be more focused on what they get up front. The one you have looked at seems to want both.

DoratheExplorer

Do you not want the IFA to monitor the investment side of things on an ongoing basis?[/QUOTE]

Ideally yes, but not if it's going to cost thousands and thousands.

DoratheExplorer

(Sorry, I messed up the quotation in my post above to Jem.)

Thank you all, it seems you're all in agreement, so I'll see if we can shop around for another IFA who will charge by the hour.

jem16

DoratheExplorer wrote: »

Ideally yes, but not if it's going to cost thousands and thousands.

As you'll see from the thread I linked to, servicing would either be 0.5% paid for out of the trail commission which at the moment is still part of the typical 1.5% annual management charge on most funds or a retainer fee to the IFA and the 0.5% trail commission rebated.

Which is best for you would probably be decided on how much is actually invested as opposed to put in savings accounts.

Does he need the income to pay for the care home fees?

lordlucanfornow

Have been with my IFA for 6 years (during which time he has changed companies he worked for 3 times and I’ve moved with him.
Have just seen him again and in preparation for the RDR in 2013 he has suggested changing from the Aviva (formerlyNU)/L&G/Co-Funds platform which he invested me in in 2005, and moving funds via PMG to the Prudential Balanced Portfolio (50%) and Pru Adventurous Porfolio (50%). ISA transfers have taken place over this time.
But I’m not entirely happy with the outcome of the investments over the last 6 years (I know, I know - recession etc. has affected investments lately). I now have a fund of approx. £112k. But am not happy that in 6 years my fund value has only risen approx. £3.5k. I’m sure I’ve paid commission about equal to this over the 6 years.
He is now suggesting paying initial commission on the £112k fund of £2,229 (which he says equates to 1.74% of the initial invested and transferred capital) and an on-going annual fee of 1% of the fund value (0.5% of this is funded by the individual fund managers directly) and this will avoid any future charges being paid by me directly for on-going advice and service. This will cover us meeting once a year . I will have on-line access to fund values via Co-Funds.
Does this seem expensive? Advice gratefully received.
Many thanks.

dunstonh

Have just seen him again and in preparation for the RDR in 2013 he has suggested changing from the Aviva (formerlyNU)/L&G/Co-Funds platform which he invested me in in 2005, and moving funds via PMG to the Prudential Balanced Portfolio (50%) and Pru Adventurous Porfolio (50%). ISA transfers have taken place over this time.

Whilst Cofunds are starting to lag behind other platforms, I cannot see any reason why I would want to move to Pru.

Does this seem expensive?

Totally. It sounds like this is a transactional adviser rather than a servicing one. Transactional advisers take up front payments each time and only get paid when you move the money. Servicing will typically move providers when needed but take no remuneration for doing so as the ongoing servicing fee covers that.

I have the suspicion that he is looking for one last pay day before he gets kicked out at the end of 2012. That is a big fear at the moment that those not planning to stay will do things like this.

Whilst we only have a few lines of what you have said and not the full picture, there is enough there to put me on guard. Your fund value should be on fee basis, not commission (fee basis will be cheaper) and if you want servicing then agree a servicing contract with an IFA that you know is going to be there and not move you every few years to generate a new commission.

saverjustice

They are doing things like this and will continue post 2013 under another guise.

I am sorry to say that I don't agree with dunstonh.

dunstonh

saverjustice wrote: »

They are doing things like this and will continue post 2013 under another guise.

I am sorry to say that I don't agree with dunstonh.

The adviser in this case is factoring the commission into the charges to hide the real cost of advice. That wont be allowed after 2013. How do you think they will be able to do that post 2013 when products wont allow it and the rules dont allow it?

saverjustice

2012 "Dear Mr Bloggs, I will receive 5% of your money when you invest in this"

2013 "Dear Mr Bloggs, I will receive 5% of your money when you invest in this"

Spot the difference.