Transact Online and wrappers

colshandy

Hi,

I have had a review done on my and the mrs pensions and ISAs and advisor recommends transferring to Transact also (the only wrat product they advise). We have ~300k between us. Analysis show transact charges will be cheaper than current products. IFA proposing a charge of !% initial and yearly so £3k coming out of the fund per year. This seems steep to me for managing the whole thing and doing a yearly review with us.

What are folks thoughts on this ?

As I have not been taking an active interest in the funds to date the peformance has been poor against the benchmark so I am looking at the IFAs charges as possibility to get our funds performing better but £3k is always going to seem steep in my eyes.

Thanks a lot in advance.

dunstonh

IFA proposing a charge of !% initial and yearly so £3k coming out of the fund per year. This seems steep to me for managing the whole thing and doing a yearly review with us.

1% p.a. on 300k is expensive. You would expect 0.5% on that amount. You typically see 1% on smaller amounts (which need the increase to cover costs).

As I have not been taking an active interest in the funds to date the peformance has been poor against the benchmark so I am looking at the IFAs charges as possibility to get our funds performing better but £3k is always going to seem steep in my eyes.

If you are not going to be active then you do need someone to be. This either means using a servicing IFA or using portfolio funds (which are typically more expensive anyway). Killing off the IFA and not doing the work yourselves will not improve returns in any noticeable way.

colshandy

dunstonh wrote: »

1% p.a. on 300k is expensive. You would expect 0.5% on that amount. You typically see 1% on smaller amounts (which need the increase to cover costs).



If you are not going to be active then you do need someone to be. This either means using a servicing IFA or using portfolio funds (which are typically more expensive anyway). Killing off the IFA and not doing the work yourselves will not improve returns in any noticeable way.

Thanks for this, it confirms what I thought that 1% seems steep. Do you know if there are likely to be there IFAs which could offer a similar service but at nearer the 0.5% mark.

I afgree about someone being active. We have pumoed a lot into the plans and they have suffered from poor performance as a result of lack of attention. I want to use this IFA but definatley not pay that much.

what is a servicing IFA ?

Cheers again

dunstonh

Do you know if there are likely to be there IFAs which could offer a similar service but at nearer the 0.5% mark.

Most. 0.5% is by far the most common figure.

what is a servicing IFA ?

Advice can be transactional or servicing. Transactional is one off advice. Typically for things that do not need servicing or where the person doesnt want servicing. Post 2013, an IFA will not be allowed to charge ongoing fees where (beyond a nominal amount for misc things - but that is still vague) if no servicing is taking place. This applies to new business arranged after that date.

Servicing is where the adviser provides ongoing servicing and reviews and typically does it for a fixed retainer. For example, on £300k at 0.5% you would expect rebalancing and bed&ISA done at no additional cost as the servicing charge covers that.

0.5% came about because most funds paid 0.5% out of the retail annual charge.