Need help investing / saving £450,000

doughnutmachine

Aegis wrote: »

I work in central London and wouldn't charge that fee. Most IFAs don't use the 3%/0.5% model any more, so putting someone off IFAs because "that's what they charge" is highly disingenuous.

to be fair, I looked at a couple of sources that said that 3%/0.5% was the going rate.


what would you charge for a client with 500k?

dancingfairy

OP. You are going to face risk whatever you do with the money. Putting it under the mattress is risky. Putting it in a bank account you run the risk of loosing money due to inflation plus having to spread it around numerous bank accounts to get the maximum safety would be a complete pain. Investing in the stockmarket can be risky also.
What you need is a good balance. A mixture of cash and shares/equities. You also need to understand your risk profile (low, medium, high) and how long until you need various pots of the money. Also whether you want something that should grow in Capital value or whether you want something designed to give an income (or a mixture of both).
Ideally you want a fund(s) that invest in a bit of everything I think. That's to say UK, US, European property and equities. Reason being is that if one part does poorly then hopefully other parts of it will hold up still.
Also remember that generally over time the stock market does well. Generally over 5 years of more the stock market will go up. If you watch the prices daily it will drive you mad as they will go up and down so be prepared for this.
I agree with interviewing several IFAs to find one you like. Someone who seems knowledgable, someone who you trust and who takes the time to explain what you are investing in and why they recommend it, and also what the costs and risks are so you can make an informed choice.
df

Aegis

doughnutmachine wrote: »

to be fair, I looked at a couple of sources that said that 3%/0.5% was the going rate.


what would you charge for a client with 500k?

It would depend on what they wanted/needed in terms of complexity and how many hours I envisaged working on it. Without actually meeting a client it would be difficult to say. I might turn away the business with no fee or I might charge up to £4-5k if a variety of portfolios with differing risk profiles was required. It could be anywhere in between.

doughnutmachine

Aegis wrote: »

It would depend on what they wanted/needed in terms of complexity and how many hours I envisaged working on it. Without actually meeting a client it would be difficult to say. I might turn away the business with no fee or I might charge up to £4-5k if a variety of portfolios with differing risk profiles was required. It could be anywhere in between.

For me £4-5k isn't a stupid amount of money for an IFA to charge for investing £500k. It's certainly a lot better than 3%!


how much would you typically charge for someone investing £100k or £1m?

Aegis

doughnutmachine wrote: »

For me £4-5k isn't a stupid amount of money for an IFA to charge for investing £500k. It's certainly a lot better than 3%!


how much would you typically charge for someone investing £100k or £1m?

£100k is almost invariably going to be a loss-leader if we do it for less than about £1,500, though I've done this amount for less this year and probably will again next year - really depends on the client though.

For £1m I don't really see any need to charge much more than for £500k unless the circumstances are very tricky. If I needed to do a taxable account with ISA, an offshore bond, a SIPP and some tax efficient investments (VCTs/EISs), the fee might creep up towards five figures, but this would be extremely unlikely for a simple investment of £1m into a single portfolio unless the client wanted hourly charging and then wasted loads of time being indecisive in meetings. Even then it would have to be a lot of wasted time!

CKhalvashi

doughnutmachine wrote: »

For me £4-5k isn't a stupid amount of money for an IFA to charge for investing £500k. It's certainly a lot better than 3%!

how much would you typically charge for someone investing £100k or £1m?

It's not a stupid amount to me, either, and I'm paying a smidge over this for the annual amount I invest each year. Pair that with a 9% average return on my investments last year, and 1% is not a bad thing after all.

CK

gadgetmind

Aegis wrote: »

For £1m I don't really see any need to charge much more than for £500k

Or £50k, or £5k, or £5 or even 50p. Or for that matter £50 million.

Hourly fees. Quote them, deliver them, charge them, and let's all move on.

(VCTs/EISs)

Hmmm, I've never met an IFA that I would trust to advise on these, nor an accountant.

These seem far more like investments that require business sense, which I have in spades, but which seems rare in the retail financial world. Or even the wider financial world given what a mess of it they seem to make.

doughnutmachine

gadgetmind wrote: »

Or £50k, or £5k, or £5 or even 50p. Or for that matter £50 million.

Hourly fees. Quote them, delivery them, charge them, and let's all move on.

I'm not a fan of IFAs, but I can see the argument that an IFA should charge more for a larger portfolio than a smaller portfolio (even though they both involve the same amount of work). The larger portfolio has more risk for the IFA, so it's fair he charges a little more.

gadgetmind

doughnutmachine wrote: »

I'm not a fan of IFAs

Ooo, you little tinker, you kept that nugget to yourself!

atush

doughnutmachine wrote: »

Lol, it's funny, I think going to an IFA with 450k is bad advice. If the OP goes to an IFA the IFA will charge an initial 3% then an annual 0.5%. Or £13,500 and £2250.....


All for dumbed down advice that's designed so that the client cant sue the IFA.

With 450K i would expect a set fee far below 3%