Bed & ISA and IFA Fees?

crittertog

Hi all,

If you've invested money into funds via an IFA, paying them an initial fee and servicing fee, and wished to "bed and ISA" some of the funds (i.e. convert units held in a fund that weren't in an ISA to units in the same fund that were), would this normally be covered by the servicing fee, or would you normally be charged for this?

Thanks

Aegis

crittertog wrote: »

Hi all,

If you've invested money into funds via an IFA, paying them an initial fee and servicing fee, and wished to "bed and ISA" some of the funds (i.e. convert units held in a fund that weren't in an ISA to units in the same fund that were), would this normally be covered by the servicing fee, or would you normally be charged for this?

Thanks

I'd assume this ought to be covered under the servicing.

dunstonh

I do mine under the servicing agreement. Couple of reasons. 1) it is servicing. So, not logical to charge more (caveat below) 2) it allows you to keep the charge non-vatable as the intention to bed&ISA involves a purchase. Which falls under intermediation and that is non-vatable.

The caveat is only if the amount invested is too small to generate much of servicing fee to cover the work involved.

crittertog

Thanks for the input - much appreciated. I thought it should come out of the annual servicing charge (I seem to remember I'd seen someone on here suggest it should be in the past), but wasn't 100% sure.

My relatives were looking at this, but their IFA suggested that it would be subject to a charge equivalent to the initial charge, which I thought was a bit much (shame, because they've been very good otherwise). I imagine that there's isn't much work involved, as they're not switching funds or rebalancing, just changing units from non-ISA to ISA status (well, I know they're sold and re-purchased, but I thought that was a clearer way of putting it).

dunstonh

I imagine that there's isn't much work involved, as they're not switching funds or rebalancing, just changing units from non-ISA to ISA status (well, I know they're sold and re-purchased, but I thought that was a clearer way of putting it).

Actually, there is more work than a fund switch. The regulator treat bed&ISA as a sale of product that is declarable on the annual return to the FCA. However, still a lot less than most things and you can usually kill two birds with one stone and rebalance, switch & bed&ISA at the same time.

crittertog

dunstonh wrote: »

Actually, there is more work than a fund switch. The regulator treat bed&ISA as a sale of product that is declarable on the annual return to the FCA.

Ah, I was under the impression that because it wasn't a "new thing", there was less checking/work involved (obviously not - it seemed simple, and must therefore not be! :rotfl:)