Should I be paying my IFA a fee in addition to trail commisision?

Headless

Hi

Lots of years ago, I hired an IFA on a fee-only basis as this seemed to be what people advised.

As a result, I have been paying him £500 a year to meet twice a year for a review and help select ISA and pension funds.

I have just noticed that he is also receiving the 0.5% trail commission. After lots of years, the 0.5% a year is worth rather more than the annual retainer.

I should probably have nomticed this earlier; but given how much the trail commission is now, I don't feel that this a fee-based relationship; but I also don't know if this is the norm.

Does anybody know if a fee-based relationshp should mean that the trail commission is also returned to me? Or should I not be paying a fee?

Any advice would be gratefully received.

Many thanks in advance.

jem16

Headless wrote: »

Does anybody know if a fee-based relationshp should mean that the trail commission is also returned to me? Or should I not be paying a fee?

It should be one or the other, not both.

I suggest you speak to your IFA and clarify things.

dunstonh

Does anybody know if a fee-based relationshp should mean that the trail commission is also returned to me? Or should I not be paying a fee?

Depends on the contract you agreed and the year it was agreed. It is only in more recent times that natural trail has been able to be rebated in the contract. Officially, natural trail was paid as part of the initial advice and misc servicing that may occur. It was only in more recent times that IFAs started using it more for real servicing contracts. Small value investments will very typically have a fee plus trail. Whereas larger investments will tend not to.

Every firm is allowed to decide it's own charging structure. So, there is no standard across the board.

CannySaver_2

Hi

If you agreed that for £500 you get two reviews each year then surely this should have only been taken once, either by fee or via fund based commission? Otherwise the IFA has been over paid.

However, if you agreed a £500 fee plus the fund based commission for two meetings then the arrangement in place is correct.

It all comes down to what you agreed with the IFA in the first place, do you have a signed fee agreement dating back to when you first started the arrangement?

The Canny Saver