Inheritance Tax: Save £100,000s with simple advanced planning Article Discussion

Tiggs_2

jem,

you are right - my clients don't regard cost and charges as a high priority so these are not issues i face.

however, back when i was an IFA (not that long ago) it was quite the norm for an IFA to take 3 or 4% plus a .5% trail. while i'm sure some take less i would be surprised if that was the average for a commission based adviser.

also important to not confuse commission and charges - an adviser getting 3% up front versus an one getting 1.5% does not mean the contract will cost you twice as much.....that's down to the charges you pay. When you replace your next vauxhall if one garage offers you a car for 10k (of which the salesman gets 1k) and another offers the same car for 9k (but with 2k to the salesman) would you take the 10k car?

clearly that example is an extreme over simplification but no more so than saying "one advisor costs 3 times another"

like i said, glad to have put all this stuff behind me

DavidLaGuardia

Tiggs wrote: »

...i never met many unscrupulous advisers until i went IFA! I found too many rested on their "status" and felt that they could get away with lower quality of customer services. I was told a few times "dont bother with doing all that work for your clients...you dont need to now you're an IFA"

I've no dobut there are bad and good both sides of the fence, but this sounds like a week anecdote to promote your point. Whatv work are you referring to?

Tiggs wrote: »

When i was tied to FP many years ago i used to believe that my ADVICE was as good as any IFAs, only my selection of companies to enact that advice was limited. When i turned IFA i found that was true - my advice was the same, i could just pick from a wider range......but in the long run is standard life better than NU...or AXA better than Scot Eq?

If you understand the true diversity, range and how to apply it to different situations there is NO way as a FP agent you would know about half the solutions out there. If you are dealing with fairly simple stuff you might get away with it, but if you are seeking a the niche that sjp seem to aim for, no one company offers the best product type in all areas, and adviser wouldn't necessarily know it if they are unaware of the existence of certain solutions. SJP are good, but no where as sharp as the most diligent IFAs

jem16

Tiggs wrote: »

however, back when i was an IFA (not that long ago) it was quite the norm for an IFA to take 3 or 4% plus a .5% trail. while i'm sure some take less i would be surprised if that was the average for a commission based adviser.

As I said the average is 1.8%.

also important to not confuse commission and charges - an adviser getting 3% up front versus an one getting 1.5% does not mean the contract will cost you twice as much.....that's down to the charges you pay. When you replace your next vauxhall if one garage offers you a car for 10k (of which the salesman gets 1k) and another offers the same car for 9k (but with 2k to the salesman) would you take the 10k car?

I have used that analogy myself when explaining commission and charges to those that don't understand. I fully understand the difference.

Let's say the best advice for me was an investment bond which on a £100k investment gave the adviser a commission of 7.5%. The IFA only took 1% and rebated the rest to me so initial allocation was £106,500. SJP took 3.5% and rebated the rest to me so initial allocation was £104,000. So immediately my investment is worth an extra £2,500. Or course SJP might not be able to give me a bond with such good terms in the first place as they are tied to certain products. So which would you choose?

Still the point remains and one which you are missing ( or ignoring ) is the range of funds available to the IFA. A good IFA will be able to utilise the best funds to the best advantage of his/her client. This will not be possible with a limited range.

jem16

tenuissent wrote: »

PS Scotland is my land too. East Fife

Meant to ask earlier before we got caught up in charges & commission. Hope it hasn't confused you too much.

What part of East Fife are you in? I was just speaking to my friend from work who has a 2nd house in Crail where she goes every weekend. She really loves it there.

Tiggs_2

lol....as i said, glad such issues are behind me

DavidLaGuardia

jem16 wrote: »

I did find mention of those charges on the other thread I linked to. You said that it was 3.5% initial commission and 0.5% trail. As the FSA quote the average commission by IFAs as 1.8% that's almost double.

This average includes execution only brokers who offer no advice, so its not exactally helpful. It also does not take into account size of investment which may change the percentage

jem16

DavidLaGuardia wrote: »

This average includes execution only brokers who offer no advice, so its not exactally helpful. It also does not take into account size of investment which may change the percentage

I think it is helpful as it gives you a figure to aim for. SJP are at the top end but probably typical of salesforce advisers. IFAs, as well as being able to provide independent advice, have the ability to rebate commission.

However the commission taken might be better explained by this post

http://forums.moneysavingexpert.com/showpost.html?p=5959564&postcount=4

Tiggs_2

Just for clarity - i can rebate commision, i have no need to do so and if i offered it my clients may feel they had wandered into a double glazing showroom...but i can do it.

tenuissent

[I was brought up in St Andrews and go back often to see family, but I now live in East Sussex. Very familiar with Anstruther and Crail, Tentsmuir, Pitmilly, Boarhills etc etc - very nostalgic names].

I have given some thought to the suggestion that a Trust of c£120k outside the current £600k NRB is not worth setting up because it will mostly be covered anyway in 2010 by the £700k limit, and discussed it with my husband.

He is concerned that the value of our house (£100k in 1997) is soaring so high that it may eventually almost fill the NRB, so we need something (the Trust) to mop up the surplus.

Also, we obviously need something to live on, so we do have money outside the Trust and if we don't make ourselves penniless, IHT will have to be paid on that eventually.

Finally, the Trust will be immediately available to our trustees to pay any IHT with: it will simplify things for them - no expensive bridging loan. I have admitted naivete - I realised only recently that IHT has to be paid somehow before the estate is released.

I am explaining this in case anyone else is in our position (?is it worth it or not). As far as St James Place goes, I dare say they are not the cheapest route and possibly not the top managers, but we have found them patient and informative, and we think they will help our trustees when the time comes.

I don't think the question of managing trusts is off the thread subject "Save £100,000s with simple advanced planning", as setting up trusts will be the solution for some people. Before looking into the subject I hadn't a clue what they were about.

jem16

tenuissent wrote: »

[I was brought up in St Andrews and go back often to see family, but I now live in East Sussex. Very familiar with Anstruther and Crail, Tentsmuir, Pitmilly, Boarhills etc etc - very nostalgic names].

It's an area I'd like to see more of. I must take my friend up on her offer to visit sometime.

He is concerned that the value of our house (£100k in 1997) is soaring so high that it may eventually almost fill the NRB, so we need something (the Trust) to mop up the surplus.

Always a consideration and difficult to know how it will go.

I am explaining this in case anyone else is in our position (?is it worth it or not). As far as St James Place goes, I dare say they are not the cheapest route and possibly not the top managers, but we have found them patient and informative, and we think they will help our trustees when the time comes.

Thanks for reporting back. It is important to be confident in your adviser. I hope it all goes well for you.