Services of an IFA

MarcoM

Hi,

Assuming one has a large sum to invest (500k plus) and is considering the services of an IFA, what should I be looking for?

How many consultations should take place between customer and IFA when planning the investments? How long should a consultation last?

Some time ago I phoned a couple of IFAs in my area and when asked whether they would work for a fixed fee they would not give me an answer on the phone. They said it depended on many factors including my own circumstances.

Can I insist before the first meeting that everything is done on a fee basis?

Many thanks

jimjames

When you say "some time ago" that sounds like it was before the RDR changes took place.

As I understand it all IFAs now work on a fee basis so you should have no problem getting that quote now.

grey_gym_sock

fees, yes, but often percentage fees, not fixed fees.

dunstonh

How many consultations should take place between customer and IFA when planning the investments? How long should a consultation last?

First consultation is usually free (typically 1 hour). After that it is usually chargeable.

Some time ago I phoned a couple of IFAs in my area and when asked whether they would work for a fixed fee they would not give me an answer on the phone. They said it depended on many factors including my own circumstances.

I can understand that. For example, most firms run multiple propositions that involve different levels of work. It is hard to say on the phone which would be suitable for you. For example, if recommending a bespoke portfolio, the work involved is different to recommending a self balancing portfolio fund. The recommendation would likely be different if you didnt want to employ them on servicing basis but one off.

Fixed fee is a common fee option but typically only when the adviser knows what services you are looking at (just as anyone pricing up a job needs to know).

Can I insist before the first meeting that everything is done on a fee basis?

Everything is done on fee basis. However, if you want to pay for the free consultation, I don't think you will have any that mind about that. Although I cant see why you would want to.

grizzly1911

In my recent experience - portfolio 6 figures.

First fact find visit free.

Following that charges will accrue.

To receive their report/suggestions, recommendations there will be a cost.

Fixed fees were available based on a percentage of the transaction 3% from which the report fee was deductible. Additional transactions chargeable at same rate.

Ongoing "monitoring", enquiry handling, administration 0.5% p.a. of the portfolio.

With a portfolio of that size reductions may be available, but added complexity, specialist solutions may make this more difficult.

Cast the net get quotes, let them know they are in competition.

MarcoM

Thanks. Is it good practice to tell them I may be seeing another three?
Also a question to grizzly, did you have any problems with banks when writing big cheques to buy the products via IFA? Did any get stopped?

I cashed a cheque for tens of thousands and at nine am the phone rang with a distressed bank manager querying my transaction....after explaining what it was for I was invited for a chat...so not sure if the call was about ML regs or sales...

jem16

MarcoM wrote: »

Thanks. Is it good practice to tell them I may be seeing another three?

I think you should let them know.

However don't expect any of them to give you too much in the way of detail on actual investments until you have made the decision to commit to one. Investing is all about opinion too so you may well get different ideas being mentioned - it doesn't make them wrong.

Ideally you should gather information on their fees and see which IFA you feel you can work best with.

Also a question to grizzly, did you have any problems with banks when writing big cheques to buy the products via IFA? Did any get stopped?

I cashed a cheque for tens of thousands and at nine am the phone rang with a distressed bank manager querying my transaction....after explaining what it was for I was invited for a chat...so not sure if the call was about ML regs or sales...

Things may have changed but 7 years ago I wrote a cheque for £100k to the provider for my investment via an IFA. It wasn't questioned and nor was I invited for any chat.

dunstonh

Thanks. Is it good practice to tell them I may be seeing another three?

You can do. You never got much on the first appointment. So, it will really be whether you like the personality or not.

I cashed a cheque for tens of thousands and at nine am the phone rang with a distressed bank manager querying my transaction....after explaining what it was for I was invited for a chat...so not sure if the call was about ML regs or sales...

it was sales. No requirement for the bank to do that at all. They can see the cheque and it being payable to an investment company and are trying to stop it to get you to invest with them. Disgraceful tactics by the banks but most IFAs have suffered that. it is less likely nowadays as the banks have sacked most of their in-house sales staff in the regulated areas.

Caladan

dunstonh wrote: »

You can do. You never got much on the first appointment. So, it will really be whether you like the personality or not.



it was sales. No requirement for the bank to do that at all. They can see the cheque and it being payable to an investment company and are trying to stop it to get you to invest with them. Disgraceful tactics by the banks but most IFAs have suffered that. it is less likely nowadays as the banks have sacked most of their in-house sales staff in the regulated areas.

I'd argue it was probably both really. The bank doesn't really care about losing a savings balance here and there, but it will jump on an opportunity to get an investor on board. At the same time, the call was probably prompted by concerns re the validity of the cheque if there was no notification in advance such a large sum was going out (especially if it's unusual for the drawer to pay out large amounts).

I've seen several instances of money laundering by using fraudulent cheques to invest funds and then cash the investments in through another account so it is reasonable to call to confirm.

Regards,
Cal

grizzly1911

MarcoM wrote: »

Thanks. Is it good practice to tell them I may be seeing another three?
Also a question to grizzly, did you have any problems with banks when writing big cheques to buy the products via IFA? Did any get stopped?

I cashed a cheque for tens of thousands and at nine am the phone rang with a distressed bank manager querying my transaction....after explaining what it was for I was invited for a chat...so not sure if the call was about ML regs or sales...

No problem with cheques in the tens of thousands.

Electronic transfers from your bank, via online banking may be an issue depending on the bank. I have two use regularly and one has a 10K limit the other doesn't have a limit (that I have reached) although bigger sums do sometimes take a little longer.

I am sure they could do bigger one off payments, by arrangement, for a fee.

How long ago was your cheque queried?

Caladan

MarcoM wrote: »

Thanks. Is it good practice to tell them I may be seeing another three?
Also a question to grizzly, did you have any problems with banks when writing big cheques to buy the products via IFA? Did any get stopped?

I cashed a cheque for tens of thousands and at nine am the phone rang with a distressed bank manager querying my transaction....after explaining what it was for I was invited for a chat...so not sure if the call was about ML regs or sales...

I've responded to the second part when I quoted dunstonh, but I forgot to answer your question.

I would suggest notifying the bank in advance with the cheque numbers, I often leave notes on customers accounts to this effect to prevent any issues. Nevertheless I'd suggest calling the bank on the day they're presented (although the bank will probably call you if there's any concerns, make sure they have your mobile number).

I'd also suggest updating your signature with the bank and ensuring you sign the cheques as perfectly as you can as the larger the amount, the more scrutiny the signature will come under (try signing a cheque for £40 'Mickey Mouse,' I can almost guarantee it'll be paid).

This isn't as much work as I make it sound. And I'd recommend using cheque rather than CHAPS as it wont cost you anything (CHAPS will cost you anywhere between £20-£50 depending on your bank).

Kind regards,
Cal