IFA fixed fees and managed portfolio charges

ISAquestions

Hi

I am 53, self employed basic rate tax payer and I have 50k to invest, aiming for retirement income additional to my private personal pension (current pot of 50k).

I have had a first free meeting with a recommended IFA. They suggest putting it all in a managed portfolio of equities, bonds, cash and commercial property. 11.2 k would start in a share ISA wrapper and the rest would gradually transfer in (as annual allowances allow)

The charges seem high to me and i wondered what others who have experience of this may think.

The minimum fixed fee for advice is £1200 and the annual charge for the investment manager to actively manage the portfolio is 1.7%.

The IFA did hint that my pot of 50k is at the low end of what they take on

I am an inexperienced investor but am wondering if i should go DIY. However platform/broker/dealing charges seem a bit of a minefield, as does selecting investments.

Any advice?

Many thanks

doughnutmachine

imho initial charges of £1200 plus active charges of £850 are extortionate.

How much value do you put on your time? I honestly think an averagely intelligent person could understand basic investment philosophies after reading a few investment books.

So you could either spend a few thousand quid with the IFA or spend a few evenings reading up....

dunstonh

I have had a first free meeting with a recommended IFA. They suggest putting it all in a managed portfolio of equities, bonds, cash and commercial property. 11.2 k would start in a share ISA wrapper and the rest would gradually transfer in (as annual allowances allow)

That sounds the sort of thing you would expect and is good.

The minimum fixed fee for advice is £1200 and the annual charge for the investment manager to actively manage the portfolio is 1.7%.

£1200 is in the ballpark you would expect. Increasingly fixed fees are being encouraged by the regulator and that means smaller investors are finding the costs higher than larger investors. The total charges of 1.7% are also consistent. Again, at £50k, you are not benefitting from fund based discounts that kick in with higher amounts. These figures are lower than the old commission days.

The IFA did hint that my pot of 50k is at the low end of what they take on

That is also true.

am an inexperienced investor but am wondering if i should go DIY. However platform/broker/dealing charges seem a bit of a minefield, as does selecting investments.

Like any job, if you DIY and DIY well then it can save you money. However, if you DIY badly then it can end up costing you a fortune. Far more than using someone else. Only you can decide if you have the time to learn and put in the research and due diligence that is required as well as the ongoing transactions such as rebalancing and bed &ISA etc.