IFA's service

andmas

I pay 0.5% annual servicing commission to my IFA, which with my current fund value is approx £750. For this he is supposed to undertake annual 'formal' reviews of the funds and give recommendations of any changes and also undertake 'informal' reviews on a quarterly basis.

I have been waiting since the beginning of the year for the formal review sending polite emails to remind him however to date nothing.

The pension is with Aviva and from commencing it in late 2009 (including transfers from previous pensions) the fund choices have remained the same and are split equally between Av Cautious Managed S6, Av Schroder UK Mid 250 S6, Av Henderson European Gwth S6, Av JPM Natural Resources S6 and Av Fidelity SEast Asia S6. It could be that these funds were and continue to be the best available but I doubt that.

The IFA is a 'nice guy' and wasn't a pushy, salesman type (which is a reason why I used him) however as I'm not receiving the advice I'm paying I am thinking of moving the pension to go via Cavendish.

Opinions appreciated!

dunstonh

I very much doubt an IFA is going to provide quarterly reviews on a £750 pension. Massively loss making.

CannySaver_2

Hi

I think it might be worth clarifying the fund value here, the way I read the OP's post was that the 0.5% equated to annual commission of £750, making the fund worth £150,000.

Would any IFA actually have undertaken a pension transfer for £750 and then used all those funds? Unlikely I would think.

Either way the OP needs to decide whether they are a DIY investor or want advice. If they are the former then a move to an online discount broker such as Cavendish (others clearly exist) might be the correct move, they will of course have a lot more work to do and may not have the knowledge or experience to do this. Alternatively they decide the do want advice and either kick the existing IFA into shape or touch.

It is clearly not on that the existing IFA is taking ongoing fees and can't be bothered to even return an email, irrespective of whether the fund is £750 or £150,000, emails and calls from clients should be returned.

The Canny Saver

jamesd

Interesting that huge chunks of the world are missing, including the US that has been in boom markets for a while now.

Hopefully you did reasonably because a fair number of those should have done nicely during the recovery in markets in 2009 and 2010. With the current US election year it'd have been a good idea to have had some money there to exploit the great market we've seen.

Mostly missed seems to have been the bond bubble that gave some nice capital growth for a couple of years, though some bonds would be in the cautious managed fund.

It still doesn't look too bad, but with the huge proportion of the world market represented by the US having nothing in the US, particularly during an election year, doesn't look very clever.

JPM Natural Resources had a manager change recently and one key decision is whether to stick with the fund and for how long, given that manager changes are a high risk time for possible performance drops.

andmas

dunstonh wrote: »

I very much doubt an IFA is going to provide quarterly reviews on a £750 pension. Massively loss making.

I don't expect quarterly reviews although the IFA did say that he would advise on a quarterly basis if he considered that I should change funds. What I do expect is the annual review that was due at the end of last year and stated in the service agreement I have with the IFA.

andmas

CannySaver wrote: »

Hi

I think it might be worth clarifying the fund value here, the way I read the OP's post was that the 0.5% equated to annual commission of £750, making the fund worth £150,000.

Would any IFA actually have undertaken a pension transfer for £750 and then used all those funds? Unlikely I would think.

Either way the OP needs to decide whether they are a DIY investor or want advice. If they are the former then a move to an online discount broker such as Cavendish (others clearly exist) might be the correct move, they will of course have a lot more work to do and may not have the knowledge or experience to do this. Alternatively they decide the do want advice and either kick the existing IFA into shape or touch.

It is clearly not on that the existing IFA is taking ongoing fees and can't be bothered to even return an email, irrespective of whether the fund is £750 or £150,000, emails and calls from clients should be returned.

The Canny Saver

I paid 1% of the value of the fund that was transferred - this is separate from the 0.5% for the servicing agreement.

I'm a DIY investor for my ISA and company pension however both of these are only around £15k each (only been with the company a short time after many years of self employment). I used the IFA due to the larger amount in my personal pension however my thoughts are that if I'm not getting advice I might as well DIY that as well.

I did spent a lot of time trying to find a suitable IFA originally so not keen to go through that again - I think I would try to stick with the IFA I've got if that is the route I decide.

I've not been completely ignored as in the last four months I've had two email responses both apologising for the delay and saying he will deal with in the "next few days". But nothing received!

andmas

jamesd wrote: »

Interesting that huge chunks of the world are missing, including the US that has been in boom markets for a while now.

Hopefully you did reasonably because a fair number of those should have done nicely during the recovery in markets in 2009 and 2010. With the current US election year it'd have been a good idea to have had some money there to exploit the great market we've seen.

Mostly missed seems to have been the bond bubble that gave some nice capital growth for a couple of years, though some bonds would be in the cautious managed fund.

It still doesn't look too bad, but with the huge proportion of the world market represented by the US having nothing in the US, particularly during an election year, doesn't look very clever.

JPM Natural Resources had a manager change recently and one key decision is whether to stick with the fund and for how long, given that manager changes are a high risk time for possible performance drops.

I did quite well in 2010 but suffered a loss in 2011. I did actually mention bonds to the IFA when I started the pension (late 2009) but his thoughts were that the bubble was about to burst and best to avoid.

The lack of US representation is also a concern - in my ISA and separate company pension that I DIY I have quite a bit of US.

Thanks for the advice on the change of manager on the JPM Natural Resources fund.

My thoughts have been to make a few changes but as I'm paying an expert I thought it better to let him make the decisions - the problem is that that is not happening!

jamesd

andmas wrote: »

I don't expect quarterly reviews although the IFA did say that he would advise on a quarterly basis if he considered that I should change funds. What I do expect is the annual review that was due at the end of last year and stated in the service agreement I have with the IFA.

It appears that the IFA has breached the terms of their contract with you and that you should seek a refund of an amount of commission equal to one year's payments that were to provide that service.

Handling of trail commission has been changed and if it's taken in expectation of a service being delivered the IFA is now expected to actually do something that bears some reasonable resemblance to providing it.

If the IFA wishes to continue not providing the service then it seems appropriate for the IFA to set the ongoing commission level to zero to reflect the lack of the agreed ongoing servicing. Or maybe the IFA would choose to negotiate with you about alternative cost and time of year when it is to be provided so it is not at a busy time.

This has been over a fairly busy time of year recently so you might consider asking once more in say mid May after the worst of any new tax year business is over and stating your intention to ask for a refund if the service isn't provided.

A loss in 2011 isn't surprising. More of interest is the lost opportunity to exploit the well known US election year phenomenon that could have been acted on profitably if the service had been provided.

I have some sympathy with the IFA when it comes to bonds, though I went with bubble somewhat later in my personal (not an IFA) opinion. Currently I do generally write about them being in a bubble still. Getting the timing of bubble bursting right is very hard so I wouldn't be unduly unhappy with this part of the service. Better to keep you out of a possible bubble too soon than leave you in one until it bursts. Particularly with annual or quarterly servicing that would make it hard to act quickly even if it was provided like clockwork.