Fidelity account fee & adviser fee

cwhite4

In 2009, I mentioned in passing to my husband’s financial adviser (who was advising him on pensions at the time) that I had an ISA account with Fidelity. He told me that he also uses Fidelity for his clients’ investments and asked me to sign up under him “so he can keep an eye on my investments”. He indicated to me (verbally) that there would be no charge to me and, in fact, I could save money by doing so. I have since made many investment transactions without noticing anything different, hence thought nothing of it. I have never taken any investment advice from him.

In summer 2011, he wrote to me suggesting that I sign up to the Fidelity account fee of £45 a year, stating that this account fee would eliminate Fidelity’s initial charges. The letter was pretty much a copy-and-paste job from Fidelity’s own literature. Seeing as I do use my ISA allowance to the full every year, I felt the (lower) £45 fee would be of benefit so I agreed.

It was only after Fidelity took the account fee in November that I realised that, not only am I now paying for the account fee, I am still paying for 3-5% initial charges. So I contacted Fidelity, only to be told the 3-5% “initial charges” are in fact adviser fees payable to the financial adviser. This means that, unfortunately, I’m probably worse off now paying both sets of charges. The financial adviser insists that I signed the paperwork agreeing for him to act as my financial adviser as well as agreeing to the account fee, so there is not much he can do.

What are my options?

dunstonh

It was only after Fidelity took the account fee in November that I realised that, not only am I now paying for the account fee, I am still paying for 3-5% initial charges. So I contacted Fidelity, only to be told the 3-5% “initial charges” are in fact adviser fees payable to the financial adviser. This means that, unfortunately, I’m probably worse off now paying both sets of charges. The financial adviser insists that I signed the paperwork agreeing for him to act as my financial adviser as well as agreeing to the account fee, so there is not much he can do.

What are my options?

Looking at the scenario, the adviser had the agency changed to them but the terms remained the same as whoever set it up in the first place. So, you would have been paying 3% all along. That will continue until such time as you agree new terms with the adviser. The exception is on funds that charged more than 3% as Fidelity got the excess. These would have dropped to 3%.

The adviser hasnt created any new fees for him. The £45 to Fidelity is the only new fee and you agreed to that. In return, you get free fund switches and funds no longer have any excess charge above 3% or whatever fee you agree with the IFA.

Options are to continue as it is, change off the fidelity fee option (although note that that bundled platform charging models are on their last legs and will be banned soon), get the adviser to agree to changed terms, change your adviser.

cwhite4

dunstonh wrote: »

Options are to continue as it is, change off the fidelity fee option (although note that that bundled platform charging models are on their last legs and will be banned soon), get the adviser to agree to changed terms, change your adviser.

Thanks dunstonh. The problem is, although Fidelity says they would consider taking me off the account fee (because it's clearly not suitable for me, not just a change of mind) I would need to do that through the financial adviser. Meanwhile, financial adviser argues that cooling-off period has passed, therefore I'm contractually bound by the agreement signed by me.

Would moving to Cavendish solve the problem?

dunstonh

The problem is, although Fidelity says they would consider taking me off the account fee (because it's clearly not suitable for me, not just a change of mind) I would need to do that through the financial adviser. Meanwhile, financial adviser argues that cooling-off period has passed, therefore I'm contractually bound by the agreement signed by me.

The Fidelity charge is a difficult one as all platforms are going fee based as they need to. Some have already gone that way. Some are drifting slowly and others are holding out as long as they can. Fidelity still have the old way available for a bit longer but the £45 charge method was the first move that way with more to follow. So, whilst you can still move back to the old way, it is only for another 12-18 months at most. Although it is believed that anything set up pre-rule change will be allowed to be kept but wont be able to be incremented/topped up. Still a number of rules to be decided yet. Originally, it was thought that the platform review rule change date would apply at the same time as the retail distribution review (start of 2013). However, the FSA has dragged its heels and it has been put back. So, the intention may have been right at the time pending the coming changes. Just the delay in them coming in makes it look wrong.

I am not a fan of fidelity. Once was but things have moved on and they have been left behind. If you are going to DIY, then Cavendish will be a better temporary option (although any bundled platform on the DIY market is largely going to be temporary). Then you keep an eye on the changes over the next 18 months and move it again then if you need to.

psychic_teabag

This document, and the linked download, suggests that once you've switched to the fee you can't switch back.
https://www.fidelity.co.uk/investor/products-services/investment-options/account-fee-adv.page

(Q&A #38 says it would be too confusing to allow switching back again.)

If Fidelity will make an exception, they'll presumably have to involve the advisor.