Do You Need Financial Advice? When To Get It, When Not To Get It Discussion Area

dunstonh

Unfortunately - a lot of advisers are still not quite up to speed with things and haven't realised that charging % based fees are out-dated and unfair.

That isnt a fair comment. Whilst percentages can lead to high charges if uncapped or if there are no tiers, your fixed charge could also lead to high charges on smaller cases. For example, my percentage charge on £150k is lower than your fixed monthly charge. Yet you say the percentage charge is unfair.

It would also depend on your business model. Whilst some IFA firms will focus on high net worth. Others will focus on the mainstream. Different models can suit different charging methods. Where you sometimes get these pricing anomalies is where you get someone who is high net worth going to a mainstream firm and not getting an appropriate reduction or someone with a smaller amount going to a high net worth firm and paying over the odds for a service not geared for them.

The initial charge in this case is far too high. The annual ongoing is right on the benchmark of what you would expect. Yes you can get it cheaper. You could get it more expensive probably too. However, the 0.5% is typical. The initial 3% is greedy.

It doesn't matter if the fee is portrayed as a percentage or a fixed amount. As long as it is disclosed and the amounts are reasonable, the actual method is largely irrelevant.

RPK

I use an IFA to look after my £300k portfolio which I have amassed to provide me with additional retirement income. It is invested in mainstream companies such as JPM, Standard Life, Invesco and is operated via a platform. How much should I be paying in fees? At present the charges are £1 for every £3 of income I receive, which seems a lot easier money for the IFA than it took me to earn and save this nest egg.

bigadaj

RPK wrote: »

I use an IFA to look after my £300k portfolio which I have amassed to provide me with additional retirement income. It is invested in mainstream companies such as JPM, Standard Life, Invesco and is operated via a platform. How much should I be paying in fees? At present the charges are £1 for every £3 of income I receive, which seems a lot easier money for the IFA than it took me to earn and save this nest egg.

That sounds an odd way to charge, what is the actual figure as this needs to be disclosed. Say you get 4% yield and this is you effective income then that gives you £12k a year and £4k for the ifa which sounds very expensive.

He may be getting reduced charges on the funds selected but it still is potentially a lot, the actual extra work in managing a larger fund isn't a lot more than a smaller one, I'd want him to seriously justify any charges much above £1500 a year assuming you've paid for the initial set up.

dunstonh

RPK wrote: »

I use an IFA to look after my £300k portfolio which I have amassed to provide me with additional retirement income. It is invested in mainstream companies such as JPM, Standard Life, Invesco and is operated via a platform. How much should I be paying in fees? At present the charges are £1 for every £3 of income I receive, which seems a lot easier money for the IFA than it took me to earn and save this nest egg.

I have never come across that charging method before. Typically, ongoing servicing is paid for as a percentage of the assets held. On £300k, a figure of 0.5% would be likely to be most typical.

One assumes that annual events like bed & ISA are taking place (i.e. you use your annual ISA allowance) along with rebalancing?

Savvy_amateur

My husband is coming up to retirement and has a pension pot of around 80k, we also have an investment with prudential, which has done very well in the last 5 yrs and is about to come to the end of its guarantee period. We have an option of continuing with it and its prediction is 6.2% pa with guarantee of full amount back after 10 yrs. Management fees, plus guarantee fees means we will be paying 2% to the pru. We should have enough income to live on without touching this. We have no other investments, so do we really need to pay a wealth management fund with an ongoing charge, or would a FA with a one off fee be a better option?

dunstonh

helcor wrote: »

My husband is coming up to retirement and has a pension pot of around 80k, we also have an investment with prudential, which has done very well in the last 5 yrs and is about to come to the end of its guarantee period. We have an option of continuing with it and its prediction is 6.2% pa with guarantee of full amount back after 10 yrs. Management fees, plus guarantee fees means we will be paying 2% to the pru. We should have enough income to live on without touching this. We have no other investments, so do we really need to pay a wealth management fund with an ongoing charge, or would a FA with a one off fee be a better option?

Transactional i would think on that basis. Not servicing.

grizzly1911

helcor wrote: »

My husband is coming up to retirement and has a pension pot of around 80k, we also have an investment with prudential, which has done very well in the last 5 yrs and is about to come to the end of its guarantee period. We have an option of continuing with it and its prediction is 6.2% pa with guarantee of full amount back after 10 yrs. Management fees, plus guarantee fees means we will be paying 2% to the pru. We should have enough income to live on without touching this. We have no other investments, so do we really need to pay a wealth management fund with an ongoing charge, or would a FA with a one off fee be a better option?

Do you wish to to stay with the Pru? Are you happy with the return? What sort of magnitude is it? (I accept there is a guarantee element).

When you say pension pot what do you mean? How will that pot be used?

You may feel you have sufficient income now but what about 5 years from now?

I am not disagreeing with dunston. Just wondering what you are looking to get out of the review?

dunstonh

I am not disagreeing with dunston. Just wondering what you are looking to get out of the review?

No, you are right. For example, the Pru policy wont be an ISA. So, annual bed & ISA could be possible as part of the servicing. So, servicing could add value. Just not perhaps to the same extent as a bespoke portfolio would need.

bill_the_bus

Hi. We are a transition part of our lives. We are in our mid fifties and both our girls are now living independant. We are taking a big risk but one we feel is worthwhile. We have sold our house and are leaving our jobs in a couple of months, both public sector. We intend to spend the foreseeable future touring the UK in our caravan and travelling abroad over the winter period, eventually settling when we are ready.

We will have around £50k from the house sale to invest and both have work pensions, i have 3 different ones and my wife also has a private pension. We also have a small endowment which matures in 3 years. We are looking for an IFA to advise on all aspects of our money lives as to which way to best invest and to tie our pensions together.

Which type of IFA would i be best using

Archi_Bald

bill_the_bus wrote: »

Which type of IFA would i be best using

An independent one. Always choose an independent one for best advice.