Savings vs investments / IFA charges

stevet2607

I have £200k cash, mostly in fixed savings bonds, and £190k pension fund which I want to consolidate into a SIPP and begin drawdown. I've seen the IFA who has managed my pension funds in the past.
After 2 x half hour meetings he has now confirmed his recommendations and charges. He wants 2.5% initial charge for the pension and 3% for investing the cash into an investment fund platform. Thats already over £10k in charges, and thats before I pay 0.5% trail commissions and the usual 1.5% fund management charges and platform annual charges. I've selected low to moderate risk investments which by what the IFA says and backed up by previous posts on MSE forum, my £200k investment should bring 5% net returns (£10k per year)

Now I understand that the initial charges are only the cost of 1 years interest, and I understand that the interest can be structured to avoid paying tax, BUT I could take my £200k down to the High st and get 4.75% gross in a savings bond.

I'm paying £10k +++ for advice that makes me £10k per year with some medium risk when its 100% safe elsewhere for not much less return. Am I missing something?

Maybe it would be better to negotiate a fee for my IFA, he has already quoted £200 per hour. How many hours would be reasonable for the work, bearing in mind he has already made the fund recommendations so now just needs to arrange transfers etc? 0.5% trail commission on £390k of investments is £1950 per year which again I could select a fee. How many hours would an IFA take to review my funds and make recommendations annually?

Hope I haven't tried to cover too much in one thread!
Thanks, Steve

dunstonh

Thats already over £10k in charges, and thats before I pay 0.5% trail commissions and the usual 1.5% fund management charges and platform annual charges.

Small edit there but the 0.5% trail comes out of the 1.5% and is not in addition. However, the initial charges are disgraceful.

Maybe it would be better to negotiate a fee for my IFA, he has already quoted £200 per hour.

Ok, so £200 an hour (which compares to the average £100-£150 an hour - although he may be highly qualified or be in an expensive city location....or greedy) means that he would have to do over 50 hours to match the £10k. So, what justification has he for charging over £10k one way and probably £1000-£2000 the other way.

0.5% trail commission on £390k of investments is £1950 per year which again I could select a fee.

Many IFAs wouldnt charge any initial on additions to a portfolio of that size. The servicing trail would cover it.