1.5% too much to pay an IFA?

jimjames

feesarefare wrote: »

But isnt 1.5% on a fee basis?

I assume your tongue is firmly in cheek:)

Anyone charging a percentage can't legitimately claim to be fee based as it takes no account of the work actually done.

missile

feesarefare wrote: »

Obviously not as good as the OPs IFA , their hourly rate would appear to be around £1000.

We do not know OPs IFA does for this fee and how much time he spends with his client. I am obviously out of touch, if £181+ is the going hourly rate for an independent IFA.

geosaver

Thanks for the comments.

The 1.5% I think is just their fee, but I will have to check with them.

The reason for wanting an IFA is because the funds are mostly in savings accounts and I think I could get a better return by investing using an IFA to do this. Plus I already pay tax at 40% so need help with minimising taxes.

jimjames

geosaver wrote: »

Thanks for the comments.

The 1.5% I think is just their fee, but I will have to check with them.

The reason for wanting an IFA is because the funds are mostly in savings accounts and I think I could get a better return by investing using an IFA to do this. Plus I already pay tax at 40% so need help with minimising taxes.

You should definitely speak to several advisers and ask for the cost on a fee basis to compare. Not a % but a number of hours and their hourly rate. If paying a fee I believe you should get all initial and ongoing commission refunded and hopefully then there is no incentive to recommend products paying the most commission.

It would be worth deciding what to do fairly soon as you have the ISA and pension deadlines in early April that you could use if the decisions are made.

Reaper

geosaver wrote: »

The 1.5% I think is just their fee, but I will have to check with them.

You may have misundertood what people are asking. IFAs charge in one of two different ways:

1) A percentage of the investment (commission).
2) A fee agreed at the start that does not vary with the size of the investment. Maybe a flat fee or per hour of work.

For large amounts such as you have an agreed fee is usually cheaper.

EDIT: Beaten to it by jimjames.

geosaver

Reaper wrote: »

You may have misundertood what people are asking. IFAs charge in one of two different ways:

1) A percentage of the investment (commission).
2) A fee agreed at the start that does not vary with the size of the investment. Maybe a flat fee or per hour of work.

For large amounts such as you have an agreed fee is usually cheaper.

EDIT: Beaten to it by jimjames.

Sorry, yes, it is a percentage of the investment. From the comments, I should ask him for a fee quotation then?

Rollinghome

geosaver wrote: »

Thanks for the comments.

The 1.5% I think is just their fee, but I will have to check with them.

The reason for wanting an IFA is because the funds are mostly in savings accounts and I think I could get a better return by investing using an IFA to do this. Plus I already pay tax at 40% so need help with minimising taxes.

What you really need to do is to shop around and if possible do some reading to understand a little more about what you might be buying. Would suggest The Financial Times Guide to Investing http://www.amazon.co.uk/exec/obidos/ASIN/027372374X

You also should be clear in your mind about the likely returns of investments over cash. A lot of people, including many on this board, have a wildly over-optimistic view. Over the long term it's likely that sensible investments will do better than cash but any advantage can easily vanish with high charges and poor timing.

If you scroll down to the last quarter of the page, this article by Paul Lewis of BBC Moneybox, gives a more realistic comparison of investment returns when normal costs are taken into account. http://www.web40571.clarahost.co.uk/archive/talks/20090319ThomsonReuters.htm

So you need the maximise your returns but do be aware of the hype from the investment industry all keen to "look after" your money. Having the hard facts will make you better placed to judge the value of any advice you are given.

Reaper

geosaver wrote: »

Sorry, yes, it is a percentage of the investment. From the comments, I should ask him for a fee quotation then?

Yes, with any commission paid to go to you or to be added to the investment. Cheaper still to do it all yourself but I sense you would rather not do that.

2010

An IFA can only tell you how funds performed in the PAST.
They have no idea how they will perform in the future.
So you could end up paying "X" amount for crap advice with no come back.

If a fund performs badly and you go back to the IFA, they`ll charge you another fat fee and advise you to move from the poor performer to something else, which over time could also be rubbish.

Basically you should have so much in cash, property, gov. bonds, shares, trackers, fixed rate bonds and a pension fund.
I think they call it a wide portfolio.

In reality you`ve got £800k and they want a chunk of it.

OUCH

Linton

Rollinghome wrote: »

.....
If you scroll down to the last quarter of the page, this article by Paul Lewis of BBC Moneybox, gives a more realistic comparison of investment returns when normal costs are taken into account. http://www.web40571.clarahost.co.uk/archive/talks/20090319ThomsonReuters.htm

So you need the maximise your returns but do be aware of the hype from the investment industry all keen to "look after" your money. Having the hard facts will make you better placed to judge the value of any advice you are given.

Agree with the bits about getting yourself educated - that is essential. Working with your IFA and understanding and questioning what he is proposing is one relatively low risk way of doing that.

But I must take issue with the use of the Barclays Equity Gilt Study as an indication of expected long term returns.

I have some very lucrative investments but I also have an significant income portfolio whose objective is income rather than capital growth.

Despite the past 10 years including 2 major downturns and my investments not being 100% focussed on maximising return I still gained an overall average annual tax-free return of over 5%, more than double the Study's estimate of cash returns.

Why is the Barclays Equity Study which gives the equity return as -1.5% annually over the past 10 years not a good guide to real investment returns? Easy - its equity return figure is based on the top 30 companies in the FTSE. Anyone who uses that as an investment strategy deserves the Study's level of return!