Commission to IFA

dunstonh

certainly know people that have felt ripped off by IFAs. And others on this thread feel ripped off by IFAs.

Yet in reality, the fee charged on the pension on this thread, whilst high, would still probably result in lower charges than a stakeholder pension that would have paid a couple of hundred quid.

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...

I spent four hours on Sunday doing a fund switch. The actual switch will take minutes. The work leading up to it took hours.

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

They could. However, there is no evidence such issues are widespread and certainly, you would find it hard to complain about commissions which are disclosed, let alone fees agreed on a signed fee agreement.

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.

How do you cost someone taking time off work to spend a few weeks reading about pensions at £0?

fairleads

dunstonh wrote: »

1% TER is not triple cost

AXA Wealth Elite
1) Axa wealth elite global equity fund of funds - amc 1.7%
This wrapper fund would typically comprise of a range of sub fund of funds, such as, for example,
2) American, European, Japan, and Asian equity funds - all with an amc of 1.7%,
Each of the above fund of funds would in turn contain a selection of managed unit trusts provided by asset managers such as
3) Artemis and Blackrock etc with an average ter of say 1% each for the dozen or so funds that comprise the American fund of funds.
Total fund costs = 4.4% per annum of fund value
Plus an ongoing adviser cost of say .5% p/a
Grand total of 4.9% costs p/a
But this is not the end of it because an annual cost of 2.5% will, over 32 years, completely wipe out the benefit of HR (maybe even at 45%) taxrelief on the contributions.

fairleads

mania112 wrote: »

Wouldn't be 'triple costs' for a DIYer though would it?

Correct, most DIYers would first do some research

What WOULD a DIYer invest in?

Depends upon their personal circumstances and the current state of the market.

dunstonh

fairleads wrote: »

AXA Wealth Elite
1) Axa wealth elite global equity fund of funds - amc 1.7%
This wrapper fund would typically comprise of a range of sub fund of funds, such as, for example,
2) American, European, Japan, and Asian equity funds - all with an amc of 1.7%,
Each of the above fund of funds would in turn contain a selection of managed unit trusts provided by asset managers such as
3) Artemis and Blackrock etc with an average ter of say 1% each for the dozen or so funds that comprise the American fund of funds.
Total fund costs = 4.4% per annum of fund value
Plus an ongoing adviser cost of say .5% p/a
Grand total of 4.9% costs p/a
But this is not the end of it because an annual cost of 2.5% will, over 32 years, completely wipe out the benefit of HR (maybe even at 45%) taxrelief on the contributions.

the charges appear different to what I can see. However, I am looking at the RDR IFA version. Looks like you are looking at the non-advised or pre RDR version.

mania112

Elite_UK_Equity wrote:

Unit price (p) 344.4
Fund Management Charge p.a. 1.70%
Fund Expenses p.a. 0.00%

How does that expand to 4.4%?

I'm genuinely curious. If someone pays £3.44 for a unit, only 1.7% comes off, I thought?

EDIT: I think I see what you're saying. That £3.44 is affected by costs of the sub-funds. The only way to prove that being an expensive not worth paying would be to know what those funds are and comparing the peformance, considering a DIYer would likely only select a few of the funds and a more 'round number' in each.

And you could say the same thing about any managed fund.

fairleads

dunstonh wrote: »

the charges appear different to what I can see. However, I am looking at the RDR IFA version. Looks like you are looking at the non-advised or pre RDR version.

Dh. I obtained my info yesterday from the Axa web. Hard to believe the info is 8 months out of date. But then again they are a financial services provider!!

Trustnet has the amcs of the respective funds as 1.25% which for the global elite equity fund equates to
total costs of 1.25%+1.25% +say 1% ter for the underlying unit trust funds plus IFA cost of .5% still adds up to to costs of 3.9% p/a and still more than sufficient to negate the 40% taxrelief on contributions

fairleads

mania112 wrote: »

How does that expand to 4.4%?

I'm genuinely curious. If someone pays £3.44 for a unit, only 1.7% comes off, I thought?

EDIT: I think I see what you're saying. That £3.44 is affected by costs of the sub-funds. The only way to prove that being an expensive not worth paying would be to know what those funds are and comparing the peformance, considering a DIYer would likely only select a few of the funds and a more 'round number' in each.

And you could say the same thing about any managed fund.

Thats correct

dunstonh

Dh. I obtained my info yesterday from the Axa web. Hard to believe the info is 8 months out of date. But then again they are a financial services provider!!

There are different classes available for different distribution channels and product versions. I can see 1% versions and some that are higher.

Looking at the Global equity version, that is 1.25% TER. The products may qualify for fund based discounts based on fund value.

fairleads

dunstonh wrote: »

There are different classes available for different distribution channels and product versions. I can see 1% versions and some that are higher.

Looking at the Global equity version, that is 1.25% TER. The products may qualify for fund based discounts based on fund value.

i don't see it like that. Axa wealth elite global equity fund is a fund of funds of unit trusts.
Each fund wrapper comes with an amc of 1.25% and the base UTs have a ter of say 1%. Even worse is that some of the base funds are trackers for which the investor is paying 2.5% + adviser costs of .5% p/a to manage a fund of funds that comprise trackers with ters of .3% or less

Perhaps an AXA spokes person could step in and verify the cost structure.
Regards

fairleads

fairleads wrote: »

i don't see it like that. Axa wealth elite global equity fund is a fund of funds of unit trusts.
Each fund wrapper comes with an amc of 1.25% and the base UTs have a ter of say 1%. Even worse is that some of the base funds are trackers for which the investor is paying 2.5% + adviser costs of .5% p/a to manage a fund of funds that comprise trackers with ters of .3% or less. To me the clue is in the terminology Axa specifically state fund amc,for each fund wrapper, not ter

Perhaps an AXA spokes person could step in and verify the cost structure.