IFA charges

feesarefare

jem16 wrote: »

Personally I thanked his post as he answered my post about how much he had invested.

I did wonder what sense you saw in this comment-

We spent a long time deciding which IFA to go with and at the end of the deliberations it was as much to do with the "gut feeling" that you have for a company just as much as the fees they charge

Might be true when its a couple hundred pounds here or there, but when its £12K commission and 1% ongoing its surely not just down to "gut feeling" - or perhaps Im missing something?

jem16

feesarefare wrote: »

Might be true when its a couple hundred pounds here or there, but when its £12K commission and 1% ongoing its surely not just down to "gut feeling" - or perhaps Im missing something?

I did say in my reply that the initial charge of 3% was high - I would not be happy with that payment.

However I did also say that it might be balanced out by the lower than normal amc - assuming normal typical retail amc of 1.5%. On £400k that could be a saving of £2k each year so after 5 years you reach a break even point. What is unknown is the actual funds or indeed non-funds used - would that amc be lower anyway?

feesarefare

jem16 wrote: »

However I did also say that it might be balanced out by the lower than normal amc - assuming normal typical retail amc of 1.5%. On £400k that could be a saving of £2k each year so after 5 years you reach a break even point. What is unknown is the actual funds or indeed non-funds used - would that amc be lower anyway?

I noted what you said and completely agree with your logic. However despite what Tony says I dont believe that the total AMC including ongoing IFA remuneration is 1%. Bear in mind Tony has stated his IFA is monitoring his investments (including cash?) on a monthly basis - that aint cheap.

FYI many IFAS are moving to a 1% annual commission and many are taking the upfront while they can as well.

Rollinghome

feesarefare wrote: »

Had a few minutes to spare so just re reading Tony's posts to try and understand why people are prepared to pay over the odds for a service they dont understand and now I also cant see what in this post is a) usefull and b) worth thanking?

Any ideas?

Maybe your fees are too reasonable. Some IFAs will be very grateful to know that there are still are prospects out there willing to pay £12k for initial advice and not too bothered about the details of ongoing commission. Would that be £100 an hour for 3 weeks/120 hours of solid work or two hours at £6000 an hour do you think?

And perhaps worth underlining that the point of avoiding commission-based advice isn't just on the issue of cost but to avoid 'commission- bias' and the reason why the FSA are to ban commission from 2013. Commission biased advice isn't worth having at any price.

feesarefare wrote: »

As you know, the IFA wont be able to provide that will they;)

I didn't like to mention it.

Rollinghome

feesarefare wrote: »

I noted what you said and completely agree with your logic. However despite what Tony says I dont believe that the total AMC including ongoing IFA remuneration is 1%. Bear in mind Tony has stated his IFA is monitoring his investments (including cash?) on a monthly basis - that aint cheap.

FYI many IFAS are moving to a 1% annual commission and many are taking the upfront while they can as well.

Would be an surprising if it was, especially as the 3% initial suggests funds. And if not then the total annual charges wouldn't be £4k a year but possibly two to three times that much. And at those levels he might get better returns keeping his money under the mattress. I hope whatever it is has been made clear to Tony.

feesarefare

Rollinghome wrote: »

Would that be £100 an hour for 3 weeks/120 hours of solid work or two hours at £6000 an hour do you think?

At our rates

How about 10 hours (very generous) @ director rate £180 per hour - £1800

which leaves the rather efficient admin of 248 hours(or to put it another way 6.2 weeks) @ £41 per hour - £10200

Yep seems alot, perhaps its just my gut feeling

jem16

feesarefare wrote: »

I noted what you said and completely agree with your logic.

Glad you agree.

However despite what Tony says I dont believe that the total AMC including ongoing IFA remuneration is 1%.

Which is why I asked him way back in Post 5 if that was the IFA fee on top of the fund charges. He later said that he checked and said it included the fund charges - I can't argue on that as I don't have the info.

Bear in mind Tony has stated his IFA is monitoring his investments (including cash?) on a monthly basis - that aint cheap.

I wouldn't imagine it would be. I wonder if monthly is really necessary though.

FYI many IFAS are moving to a 1% annual commission and many are taking the upfront while they can as well.

I do realise that. Probably those that do not intend to take the necessary qualifications to remain IFAs I should imagine so they are making the most of what they can.

I would think that one of the main questions to ask any IFA is what his/her intentions after RDR will be.

feesarefare wrote: »

At our rates

How about 10 hours (very generous) @ director rate £180 per hour - £1800

So would your fee ( including any product set up fees) be £1800 for a £400k investment?

feesarefare

jem16 wrote: »

So would your fee ( including any product set up fees) be £1800 for a £400k investment?

To do a financial plan costs £1000 +vat therefore our fees average between £1500 & £2000 per case. As our fees are not related to the amount invested they dont vary much. There are many cases where no money is actually "invested". The financial plan may show there is no "inflation risk" and more often than not we recommend spending more and or giving their money to children/grandchildren. funnily enough they seem to be alot happier with that than a piece of paper with "Skandia" in the top left hand corner.

jem16

feesarefare wrote: »

more often than not we recommend spending more and or giving their money to children/grandchildren.

I just hope the council doesn't come back at them later for deprivation of assets.

feesarefare

jem16 wrote: »

I just hope the council doesn't come back at them later for deprivation of assets.

And why on earth would they do that?