Independent Finance Advisor charges

coxwell

I have searched high and low to find out what would be a reasonable commission to pay an ifa when buying offshore investments. Any advice gratefully received.

dunstonh

Depends on the business model of the IFA and how much commission they have negotiated with the provider.

You can see one IFA who gets 4% commission and another that gets 7% but the charges are identical to you. If you see a 7% IFA who rebates 2%, then he still gets paid more but you get more as well. So you do need to focus on the charges more than the commission.

If you assume the natural 0.5% fund based commission is paid, then commission can range from 1% initial to 5% initial.

EdInvestor

Here's an offshore discount IFA who's pretty competitive on charges.

https://www.offshorerebates.com

dunstonh

How do you know the charges Ed? It has one paragraph where it says

Are you paying initial unit charges and 7% bid/offer spreads? Our clients don’t. Do you suffer surrender penalties if you want to withdraw? We can usually avoid this too. It is actually cheaper to do your business with us than not in most instances, and advice is both ongoing and free.

That is an absolute extreme and God forbid anyone gets set up on that nowadays. However, I cannot see any mention of their commission cut on their site. It just says they discount commission. Well, most IFAs discount commission to some degree. Some, like NMA IFAs can discount a heck of a lot, others may do a tiny amount and others none.

My guess is that they are operating under the NMA basis but havent actually published how much they discount.

EdInvestor

That is an absolute extreme and God forbid anyone gets set up on that nowadays.

Quite normal in the offshore market AFAIK, where old style rip-off practices and products are the norm.

dunstonh

Its not quite normal. It is an example of a bond from 5-10 years ago and a few of the worst extremes available today. Just because some are available like that, doesnt mean they all are.

Its a bit like saying the sports cars are rubbish because you have driven an Austin Metro and that wasnt very fast.

Stop trying to measure current offerings by those that were available in the past. All you do is muddy the waters and add confusion when there is no need to do so.

Offshore bonds are more expensive than onshore offerings. There are some very expensive providers around still but there are also some cheaper ones. Dont measure the product by the worst examples.

Chrismaths

From offshorerebates:

"Portfolio Bond: These products typically cost approximately 1.2% pa, with a 2% establishment charge in the first year. However we only use them or large cases and if the case is large enough we can totally renegotiate the product charging structure with the life companies. We have some very large clients invested in this way and cost savings of £20,000 or more are not unheard of.

Offshore-Rebates.com would enhance your investment into one of these plans. We would usually charge 1% pa annual management and administration on these plans but we reduce this for very large cases. Full details available upon request."

That's bloody expensive.

When we do offshore bonds, AXA charge 1% upfront + c£85 a quarter, we take no commission on the bond, and charge our management fee of 1% pa.

dunstonh

As another example, I take 1% commission and keep the natural 0.5% p.a. fund based commission. So I am cheaper than them as well

EdInvestor

You are missing the point.This IFA deals with expatriates living overseas, not British people in the domestic market.It's a different market entirely.

Tiggs_2

then how is it relevant to the OP????

"Quite normal in the offshore market AFAIK"

"AFAIK" should be banned because it basically gives people the chance to post nonsense- prime example here.

EdInvestor

Tiggs wrote:

then how is it relevant to the OP????

Perhaps the OP is an expat?

I have searched high and low to find out what would be a reasonable commission to pay an ifa when buying offshore investments.

It's actually quite easy to compare charges if you are in the UK - as we see on this thread.That's not so if you are an expat and that's why I assumed he lived overseas. Either way, he's got some useful pointers from the answers here today