Independent Financial Advisor fees query

Barrow10

I have £100,000 to invest and recently contacted a, recommended, Financial Advisor. He recommended an investment which I thought might suit me but said I would need to think it over. He left me with a lot of information and, having read through it all, find that on my investing this money he takes an initial fee of £3,000 then a further £3,500 every year thereafter! When I queried this with him he said he could "do a deal" for a large investment. My query is this, is this a normal fee charged by financial advisors?

feesarefare

Barrow10 wrote: »

I have £100,000 to invest and recently contacted a, recommended, Financial Advisor. He recommended an investment which I thought might suit me but said I would need to think it over. He left me with a lot of information and, having read through it all, find that on my investing this money he takes an initial fee of £3,000 then a further £3,500 every year thereafter! When I queried this with him he said he could "do a deal" for a large investment. My query is this, is this a normal fee charged by financial advisors?

3% plus 0.5% trail commission is the pretty much the norm for commission based advisers. Are you sure the ongoing commission is £3500 ?

Aegis

That is very expensive for the business you've asked him to transact for you. Typically you'd be able to reduce the initial fee by going to another IFA, while that trail fee is simply ridiculous.

Look around, you're bound to find an adviser charging significantly less than that.

mackemdave

OP not sure what part of the country you are in but if its within a 100mile radius of Berkshire I can give you details of a guy Ive used for nearly 30 yrs for mortgages,ISA's and most recently investments....The only time I didnt involve him and went and did my own thing I lost 75% of my investment,thats another story...PM me if you want the details

Cautious_Investor_3

Hi

It is hard to comment on the level of the initial fee without knowing what has been recommended.

However a fee of 3% is probably pretty normal in the current market, I guess the most important thing is whether you feel you are getting value for money. If you are then no problem, if you are not then ask him to negociate or indeed work on an hourly rate, which might be cheaper.

Re the renewal fee, it is so high I suspect it is inaccurate. Have you misread the quote? It could be that he is taking 0.5% pa i.e. £500 and the quote says something like "in the first year the fee will be £3,500" i.e. £3,000 initial fee plus £500 renewal. Just a thought as when something is so high like this it is generally wrong.

The Cautious Investor

Ifts

If the renewal fee you have been quoted is correct it is very high, if I was you I would arrange to see other IFA's and see what they quote you.

Link: http://www.unbiased.co.uk/find-an-ifa/default.asp
To select from all 8,000 IFA locations (not just the ones that have paid to advertise) untick the box in section 2.

Cautious_Investor_3

Ifts wrote: »

If the renewal fee you have been quoted is correct it is very high, if I was you I would arrange to see other IFA's and see what they quote you.

Probably worth checking if it is a mistake on the quote or wrongly interpreted before we consign the IFA to the dustbin!

Also, what products have been recommended and if it is an ISA / Pension / OEIC what is the RYI? This will help establish whether the IFA really is charging 3.5% pa to service the contract (which I can't believe he is)

Ifts

Cautious_Investor wrote: »

Probably worth checking if it is a mistake on the quote or wrongly interpreted before we consign the IFA to the dustbin!

Was not consigning the IFA to the dustbin, but there is nothing wrong in getting a second opinion or trying to get the fees reduced, especially when the OP said:

Barrow10 wrote: »

When I queried this with him he said he could "do a deal" for a large investment.

dunstonh

3% plus 0.5% p.a. (the adviser bit - not the platform and investment bit) is the typical maximum you see. According to FSA figures, the average is 1.8% plus 0.5%.

it sounds like the advice in this case is quoting their commission offering rather than their fee option. Ask them for the fee option figures. Plus, the annual figure seems wrong as already mentioned.

Barrow10

I did query the yearly fee with him which was when he said he could "do a deal". Sounds like I should try another advisor. The investment he recommended was with MetLife and was to give me an income but as far as I can see he is the one with the income not me! My husband has recently be diagnosed with inoperable cancer and as a result he is anxious to have something in place for me before his time comes.

feesarefare

Barrow10 wrote: »

I did query the yearly fee with him which was when he said he could "do a deal". Sounds like I should try another advisor. The investment he recommended was with MetLife and was to give me an income but as far as I can see he is the one with the income not me! My husband has recently be diagnosed with inoperable cancer and as a result he is anxious to have something in place for me before his time comes.

Sorry to hear about your husbands condition.

While I cant comment on the suitablity of the Met Life product I can say that it doesnt allow trail above 1% per annum so I think your IFA has not explained things properly. Before taking any drastic action I would check with them again and I,m pretty certain the ongoing commission will be 0.5% of the bond value per annum.