Affordable IFA advice

Alenna

I've recently had to take early retirement through ill health. This means I've only got a small lump sum: £30K. I really need to get some advice on how to invest it safely and help it grow plus some help with some tiny stakeholder pensions.

I've had initial conversations with two IFAs. One wants me to invest most of my cash including other savings and wants to charge a one-off 3.5% then 1.7% ongoing management.

The other says that my lump sum is too small for IFAs to deal with and that their fees would make it not worth it. Similarly with my Stakeholder pensions: they are too small for an IFA to bother bother with but the pension provider will only deal with an IFA. I've seen on previous threads that this may be true but surely there must be IFAs out there that will deal with 'smaller' investors and charge appropriately. Most people don't have £100k do they? Where can I go?

dunstonh

I've had initial conversations with two IFAs. One wants me to invest most of my cash including other savings and wants to charge a one-off 3.5% then 1.7% ongoing management.

1.7% would be the total. Not the adviser take.

The other says that my lump sum is too small for IFAs to deal with and that their fees would make it not worth it.

IFAs do tend to deal with larger investments. £50k plus is commonly quoted. I wouldn't offer a servicing arrangement to you. Just transactional. So, I consider the opinion of that adviser to be an accurate reflection.

Similarly with my Stakeholder pensions: they are too small for an IFA to bother bother with but the pension provider will only deal with an IFA.

How small is small?

Most people don't have £100k do they?

With IFAs they do. The sub 100k market tended to be filled by the banks and insurance company salesforces. Most of which have gone. There are IFAs and restricted (but virtually whole of market) advisers that have moved into those areas but they still find it hard to remain profitable with business under £20k to £50k. That is part of the reason why the banks and most insurers have pulled out.

pip895

Some advisors will give telephone advise for smaller Investors including HL

http://www.hl.co.uk/advice/independent-telephone-advice

pip895

Further to the above - your situation looks rather similar to what I have recently been through, although I was lucky enough to have a rather larger pot to invest in a SIPP so I got a free visit from a financial advisor. I think your initial consultation with HL would also be free and you may get enough advise from that to allow you to move forward without paying more.


Particularly with further advise from sites such as this.

dunstonh

Some advisors will give telephone advise for smaller Investors including HL

Notice how they say £20k plus though. You would probably find local advisers willing to give advice on £20k plus (although some will move more towards £50k or more).

£30k, plus pension planning should not find if too difficult to get local advice unless you are city based.

pip895

dunstonh wrote: »

Notice how they say £20k plus though. You would probably find local advisers willing to give advice on £20k plus (although some will move more towards £50k or more).

£30k, plus pension planning should not find if too difficult to get local advice unless you are city based.

But if you go for a local IFA you will be stuck with the sort of charges mentioned by the poster at the very least. HL will charge 1 to 2% if at all - I set up a SIPP with them from 5 different pots - including several very small ones and incurred no advise costs at all. For many people there is no need to pay for advise.

jamesd

Alenna wrote: »

This means I've only got a small lump sum: £30K. I really need to get some advice on how to invest it safely and help it grow

By safely do you mean without drops in value that are recovered later? This matters because many investments work like a rollercoaster in reverse, lots of ups and downs but upwards over the longer term. If you aren't willing to accept such ups and downs you greatly harm your potential income or growth. By picking the investments you can sort out just what sort of drop might happen during a down period. The main UK stock market would drop by perhaps 20% every three to five years and by 40-50% once or twice every ten years. But in between grow enough to be up overall.

Alenna wrote: »

the pension provider will only deal with an IFA.

There should be no reason for an IFA for a stakeholder pension transfer. At a minimum you should be able to consolidate them all into one yourself.

dunstonh

But if you go for a local IFA you will be stuck with the sort of charges mentioned by the poster at the very least.

Nothing wrong with those charges.

HL will charge 1 to 2% if at all - I set up a SIPP with them from 5 different pots - including several very small ones and incurred no advise costs at all. For many people there is no need to pay for advise.

You are paying more to HL than it would probably be on a transactional IFA basis. Plus, yours was not advice. HL's fees indicate a minimum fee of £495 plus VAT. VAT is strange as the intention to purchase a product makes the fee non-vatable. Even if a purchase does not occur.

Alenna

dunstonh wrote: »

How small is small?

Two old pots totally around £6k between them. I'd like to combine them to reduce management costs but Aegon won't let me and will only take instruction from an IFA.

dunstonh

Alenna wrote: »

Two old pots totally around £6k between them. I'd like to combine them to reduce management costs but Aegon won't let me and will only take instruction from an IFA.

Aegon wont because they are not authorised or regulated to carry out that transaction. It needs an IFA or intermediary as they will be regulated and will carry the liability for that transaction.

Stakeholders are largely a niche product nowadays. Personal pensions are usually cheaper. If you are paying a monthly premium into the pension, then moving to a PPP and doing the consolidation at the same time may well be the best way. Using an IFA or intermediary or an online execution only service such as Cavendish may be the solution here.

doughnutmachine

pip895 wrote: »

For many people there is no need to pay for advise.

Amen to that!!!

It always surprises me how many people are happy with an adviser sticking their hand in their savings and helping themselves.