Commission to IFA

atush

AS always, the anti IFA argument is tarnished by those (incl the media and many anti IFA posters here) who confuse IFAs with tied agent FAs of banks and insurance companies.

This will form a 'hangover' for some years.

mania112

You don't need to look at a newspaper for fees, many firms publish their prices, like:

http://www.icl-ifa.co.uk/services/fees/

FYI - this is not my firm, but these guys are well respected in the industry.

dunstonh

Ok, here is an example of a real case and you can decide whether you feel an IFA is offering value or not. I am charging £3000. Way above my norm but its a case that started in March and involves higher liability risk and has taken a lot of time and admin and involved multiple visits. That fee is being deducted from the pension fund and any commission rebated within pension fund.

The net result of the advice is over £2000 a year higher income and £11k extra tax free cash than what the client would have got had they DIY. I reckon with a bit more work with the providers I will get that improved to around £2500 a year better. I have also improved death benefits over what they were going to take (100% spouse instead of 50%).

atush

Worth paying for.

jem16

dunstonh wrote: »

The net result of the advice is over £2000 a year higher income and £11k extra tax free cash than what the client would have got had they DIY. I reckon with a bit more work with the providers I will get that improved to around £2500 a year better. I have also improved death benefits over what they were going to take (100% spouse instead of 50%).

Absolute no-brainer in my opinion. In one single year they have netted more than 4 times the cost of the advice.

I'm sure your clients are delighted with the advice and outcome.

doughnutmachine

dunstonh wrote: »

That perception does not match reality. The FOS has praised IFAs a couple of times in recent years. Most recently, over complaint handling which showed that the majority knew their clients and were able to show the advice was good. Most FOS complaints with the FOS are rejected. IFAs only account for 1% of complaints at the FOS. No-one can claim perfection but the reality does not match the perception you have. Perhaps you are tarnished by FAs and insurance agents who have a much worse reputation within the industry but many consumers would not be able to tell you the difference.

I was questioning the cost of the advice given, not the actual advice.....

I certainly know people that have felt ripped off by IFAs. And others on this thread feel ripped off by IFAs. OK, it's fairly anecdotal evidence, but it does lead to the perception that some IFAs should not be trusted.

If I can start a SIPP by filling in a few forms I just don't see how an IFA can justify charging thousands to do the same for a client....... Of course some people will want their hand held when it comes to investing, but imho paying thousands a year for the privilege is foolish.

Anyway, I didn't think the FOS investigated IFAs ripping of clients?

jem16

doughnutmachine wrote: »

If I can start a SIPP by filling in a few forms I just don't see how an IFA can justify charging thousands to do the same for a client

Is that really all you think is involved when an IFA provides advice and organises the set up of an appropriate pension?

doughnutmachine

jem16 wrote: »

Is that really all you think is involved when an IFA provides advice and organises the set up of an appropriate pension?

I take your point, but what advice would an IFA give the average reader here that is not in an up to date pension book?

so there are two options of starting a pension:

Option A.

Go to library and get some reference books and spend a few weeks reading. Start pension. Cost £0

Option B

Go to IFA. Cost £5,000.

jem16

doughnutmachine wrote: »

I take your point, but what advice would an IFA give the average reader here that is not in an up to date pension book?

Where would you find this up-to-date pension book? I've yet to see websites with up-to-date information.

However assuming you find one, what pension would be suitable out of stakeholder, personal or SIPP? Once the appropriate pension is decided on, what provider do you use and why? Once that's been decided on what investments do you actually put inside the pension?

Of course there is also the added question. Is the pension tax wrapper the most suitable at this point? Would something else be more suitable?

so there are two options of starting a pension:

Option A.

Go to library and get some reference books and spend a few weeks reading. Start pension. Cost £0

Cost of time - could be a lot depending on what else you would be doing whilst you research.

Cost of getting the choice wrong - could be even higher.

Option B

Go to IFA. Cost £5,000.

Or Option C;

Find an IFA with a more normal charging structure and pay around £500 - you did read the figures atush provided. Of course some pensions may require more work to set up but £5k would not be indicative as we've said before.

grey_gym_sock

or there's always Option D,

decide pensions are a rip-off, spend the money instead. a a few decades later, go on MSE to complain you've been misundersold a pension ...