£220,000 to invest

specialist_2

IFA all the way - you really need to sit down with an Independent Financial Adviser, talk through YOUR personal situation and tell them YOUR goals and desires for the future so that you can get a solution which is right for YOU. Its the only way, general advice or once size fits all advice will not help in the long run.

claire21

Thanks for all your thoughts. I just wanted to get it somehere quickly as its been a week in my crap current account. My dad has just got cancer and i have 3 "littles" so time so short at the mo leading up to xmas. Looks like IFA when i get some time.

CSS_2

Good luck Claire and sorry to hear about your Dad. I'm in a similar position myself. Would be interesting to hear how you get on.

CSS_2

Also, what kind of commission would an IFA take?

dunstonh

CSS wrote:

Also, what kind of commission would an IFA take?

It varies. Ideally you should aim for 3% initial commission plus 0.5% p.a. (which is default for ISAs and Unit Trusts. Other tax wrappers can be a little higher but with that higher amount rebated, it creates a level playing field).

A new model adviser should be cheaper and that is 1% plus 0.5% p.a. NMA IFAs will be more investment focused as that is their core business. There is little point seeing an IFA who deals mostly with mortgages when talking about investments. You need an investment specialist IFA.

Remember you do not directly pay the commission with a lot of products. The provider pays the commission and you pay the charges on the product. The two things do not always equate.

You could have one IFA earning £2000 on a product and other £3000 despite the product and terms being identical to you. If the second one rebates £500 commission, then that makes the contract better to you but he is still earning more commission than the first one. It is important to look at charges not commission in these things.

Its very similar to buying a washing machine. Do you look at the profit that the retailer makes or do you look at the price and the service you want?

With an amount like this, fee basis would be cheaper with all initial commission rebated. Or the hybrid option of agreeing a fee and having the commission equal that fee with the remainder being rebated (that is the most popular method at the time being for discount/NMA IFAs).

CSS_2

That's an extremely high rate of commission, especially as I've got around 400k.

dunstonh

That's an extremely high rate of commission, especially as I've got around 400k.

Then dont go with the commission option but go with the fee option instead. Commission is better for smaller amounts and fees better for larger.

You should note that commission is not pure income. Financial services has quite a heavy administration cost. My costs run at around £70,000 a year. Thats an average of £5833pm. So, you may see a commission of £2500 as a lot but thats not pure profit.

You never said what you had either. You would expect £400k to get a better deal than 40k.