Standard Life Wrap Product..thoughts please

JSMill

Sorry, I don't know how to cut quotes (?).
My IFA charged % upfront and 0.5% thereafter. Not sure what explicit means in this case, except that they never have referred to anything other than in %age terms, no mentions of caps or alternative fee basis or anything of the kind, either verbally or in writing. From recent response I cannot make out whether or not they may have in some way been non-compliant with the rules, though I did get the general impression from previous reply that those rules are currently vague. Would appreciate clarification. Thanks!;)

dunstonh

Not sure what explicit means in this case

Explicit means that you know what the charge is and its charged exactly like that.

From recent response I cannot make out whether or not they may have in some way been non-compliant with the rules, though I did get the general impression from previous reply that those rules are currently vague.

Percentages are allowed. Fixed amounts are allowed, hourly rates are allowed. Ad hoc charges per transaction are allowed. As long as you are told exactly what it is it doesnt matter. Its about agreeing the remuneration rather than finding out at the end what the commission would be.

The FSA has no rules on what isnt allowed. However, many compliance firms recommend that fees are viewed fairly to avoid any action. Such as putting a cap on a percentage fee. i.e. 1% initial may be good value for small and medium sized investments but large investors, say £3million would be hit with £30,000 at 1%. That wouldnt be fair.

dunstonh

Dont you think thats quite bizarre- if there are no rules, what action could be taken?

TCF ruling probably under fairness. However, ethics and professionalism should prevent it even if there are no rules. Some people need those ethics forced on them!

Percentage fees are commission though.

No they are not.

dunstonh

And here you go with Fee:

a payment made to a professional person or to a professional or public body in exchange for advice or services
they were faced with legal fees of £3000
money paid as part of a special transaction, for example for a privilege or for admission to something:an annual membership fee
(usually fees) money regularly paid to a school or similar institution for continuing services:tuition fees have now reached $9000 a year


So, if you agree a fee of x% then it is is fee. It is not being paid by the company. Its being paid by you. You have agreed a payment in exchange for advice or services.

sandsy

Have to agree with Dunston. And even from 2013, % charges are allowed according to the FSA's policy statement (PS10/6, para 4.8).

JerryC

Well as far as the SL wrap is concerned, the money paid from the wrap to the adviser is called commission. There is initial commission which is a percentage of a one off payment, level commission which is a percentage of a regular direct debit and fund based renewal commission which is a percentage of the total fund under management. It is also possible to deduct commission on transfers or re registrations. All of these commissions can vary between 0 and a maximum. It is up to the adviser to instruct SL how much of each commission to pay out and therefore up to the client to to agree with the adviser how much, if any, of each commission they are willing to pay.

Once you have a SL wrap account you can log on and see a complete listing of all transactions on your account including each commission deducted for the adviser, so if if any commission is paid out which you had not agreed to you can query it.

jem16

feesarefare wrote: »

If you are happy to charge someone investing £100K double that you would charge someone investing £50K, for what is exactly the same amount of "work" then again good luck- cant really see where its treating the £100k investor fairly?

A while back you told me that your financial plan costs £1000 +VAT so your average fees range between £1500 and £2000 per case.

http://forums.moneysavingexpert.com/showpost.php?p=40159462&postcount=29

So on a £100k investment this would be the equivalent of 1.5%/2% and for the £50k investor the equivalent of 3%/4%. An IFA charging a 1% fee (with a £2k cap) on £100k is paying £1000, on £150k is paying £1500 and £200k is paying £2000. Anything higher is still £2000. If he's happy to also charge the £50k investor 1% that's only £500 - perhaps the small investor will turn out to be the bigger investor later or recommend the IFA to someone.

There are some fee based IFAs whose minimum charge is £2000 no matter what amount is being invested.

It's about choice and there should still be choice. Different models will suit different people.

Unfortunately if the only choice available from an IFA is an average fee of £1500/£2000, it is going to drive the smaller investor into the hands of bank's advisers as they would not see paying £2000 for an investment of £50k/£100k as good value.

jem16

feesarefare wrote: »

Absolutely, isnt that the same for most services?

Good - at least we agree on something.

Sorry I dont understand where you get your figures from? Why would it cost someone investing £100K with a bank less than £2000?

It won't. It will probably be much more. The point is that people will perceive it to be less as the bank "appear" to be offering them something with no fee.

Financial Planning isnt and wont be available from banks so if if thats what people want going forward they are going to either DIY or find a Financial Planner.

That's the point you are missing - not everyone wants or feels they need a financial planner.

jem16

feesarefare wrote: »

But banks are going to have to comply with the RDR as well

Banks will still win as lower net clients will save rather than invest then.

Not really missing at all, if you are genuinely putting the client at the core you have to do financial planning. Sorry but thats a fact.

There are different degrees of financial planning - that's a fact.

jem16

feesarefare wrote: »

Hows that winning? Lower net clients dont save a penny at the moment

Save as in use a savings account.