IFA charges - is this reasonable?

rpc

fairleads wrote: »

I second that. In spite of all the protestations to the contary, it does appear the industry is populated by a significant number of chancers.

and a significant number of decent, honest folk. Also worth noting that while the fees are a bit high, there's nothing to suggest the IFA in question is a chancer. We just got some quotes for some roof work and the range was 1k to 5.5k. I am familiar with the most expensive company and wouldn't at all call them chancers based solely on their fees - I don't see why the same can't apply to the financial sector.

Fortunately, people are able to use forums such as this to receive good (and bad) advice on matters such as this.

genie_g

Thanks everyone for your input.

I've seen one other IFA who only really offered commission basis and I didn't really gel with him anyway. This guy seemed much more on my wavelength but I don't want to be paying over the odds.

I think I'll do a bit more research on the fees other local IFAs are charging (though it's been hard enough to find two to speak with but that's another story), clarify a couple of points with this guy and, if I think it's justified, see if he can improve his charges.

Thanks again.

jamesd

An IFA is required by the regulations governing them to offer a fee basis and the fee should not simply be the same as the commission. It's not a surprise that they would prefer a commission in your case but your interests and their sin this part of the service are different.:)

bigfreddiel

basically if you think the ifas advice is worth it then it is.

things are only worth what people are willing to pay - for example would you pay $120million for a pastel - probably not but someone thought it was

http://www.guardian.co.uk/artanddesign/2012/may/03/the-scream-sells-record-auction

genie_g

jamesd wrote: »

An IFA is required by the regulations governing them to offer a fee basis and the fee should not simply be the same as the commission. It's not a surprise that they would prefer a commission in your case but your interests and their sin this part of the service are different.:)

Offering a fee basis consisted of 'we can work on a commission or fees basis but nobody ever chooses to pay a fee'.

Also, apparently the commission doesn't cost me anything as the provider pays it.

At that point strangely enough he finally lost my trust!

genie_g

bigfreddiel wrote: »

basically if you think the ifas advice is worth it then it is.

I believe an IFAs advice is worth paying for but I'm not convinced that this individual IFAs advice is worth more than one who would charge me less.

Also, I might believe it is worth it at the time I pay for it but discover later that it wasn't after all - plenty of examples of that in other spheres of life too!

Aegis

genie_g wrote: »

Offering a fee basis consisted of 'we can work on a commission or fees basis but nobody ever chooses to pay a fee'.

Also, apparently the commission doesn't cost me anything as the provider pays it.

At that point strangely enough he finally lost my trust!

You're right to walk away from that - that's exactly the sort of outright lie that should be reported to that adviser's compliance department. Any commission paid to the adviser WILL come from product charges, which in turn WILL reduce the value of your investment. There's absolutely no debate over this point: if you are told that commission is free, then the adviser is simply lying.

The only time it comes close to the truth is with annuities, where providers will almost invariably keep the commission associated with annuities unless it's paid to an adviser to cover their costs. Even then, the commission is taken by way of an implicit charge on the annuity, i.e. a permanent reduction in the rates offered to allow for an up front commission payment.

That sort of comment had no place even last decade.

If you have time and inclination, please complain about that to the firm's compliance officer, as it's a truly dishonest thing to say and should result in a formal reprimand at the very least.

DavidLaGuardia

genie_g wrote: »

Also, apparently the commission doesn't cost me anything as the provider pays it.

!

Unbelievable! does he actually expect people to beleive there is a magic money tree somewhere?

On the subject of fees/commission, over several years the ongoing cost and value is nearly always important than the initial cost. I would agree that a blanket 3% on 278k is a steep though.

jamesd

genie_g wrote: »

Also, apparently the commission doesn't cost me anything as the provider pays it. ... At that point strangely enough he finally lost my trust!

As it should have done. A more ethical approach would be to cost the work on both commission and fee basis and let you choose which to use, which would surely be fee basis in your case.

He's probably right that few would choose fee basis, even more so if he describes it like that to a prospective customer who would benefit from fee basis.

sandsy

Ask the adviser to define "identifiable piece of work" and if he can't or won't, then find another.

From the end of this year, advisers need to have charging structures which lay out their services and the charges for them clearly and they have to indicate to customers the likely cost in £ of taking their advice. Many advisers have already moved to that model.

This one sounds like he has a way to go before he'll be ready.