Arranging S&S ISa via an IFA - Fees?

Wammer

I am about to dip my toes into S&S ISAs for the first time and have taken advice from an IFA seeing as I don't know the first thing about them. I have seen the suggested reading on here, but I don't have the time to delve into it properly. I would be transferring from existing cash ISAs.

I don't have a written illustration/quote yet, but the IFA has suggested a platform with Skandia and a fund with Old Mutual(?) although I think he said they are known by a different name.

The fees mentioned are 2% one off fee for the IFA plus 0.5% annual fee, 0.35% for Skandia and 0.6% annual management charge.

Does this sound like good advice and are the fees reasonable?

grizzly1911

Wammer wrote: »

I am about to dip my toes into S&S ISAs for the first time and have taken advice from an IFA seeing as I don't know the first thing about them. I have seen the suggested reading on here, but I don't have the time to delve into it properly. I would be transferring from existing cash ISAs.

I don't have a written illustration/quote yet, but the IFA has suggested a platform with Skandia and a fund with Old Mutual(?) although I think he said they are known by a different name.

The fees mentioned are 2% one off fee for the IFA plus 0.5% annual fee, 0.35% for Skandia and 0.6% annual management charge.

Does this sound like good advice and are the fees reasonable?

Can't comment on the advice because I don't know your circumstances, what you told the IFA or details of the investment suggested.

The fees seem roughly in line with quotes I have received. The initial fee is actually slightly cheaper at 2% rather than 3%.

Whether the fee is reasonable, bearing in mind the complexity or otherwise of your case, is another matter,

bigadaj

Is this just this years isa, as if you are looking at say £11k then I would t have thought it would be worth the ifa, he'd be considering it as an effective loss leader for future work.

Having said that with small sums then the effects of investment strategy are reduced, so you could DIY and start learning yourself.
Most people wouldn't go wrong with starting a vanguard lifestrategy fund with some like charles stanley direct for example. No upfront fees, well a dilution levy of 0.5% really, and a total annual charge of 0.5%.

For the actual sums involved currently it might be worth you. Using the ifa initially and then learning more, taking over management in a couple of years maybe.

ColdIron

The charges look reasonable but I would question the IFA's ongoing 0.5%. If you are invested in a single fund there can't be much in he way of re-balancing or ongoing work. I'd ask him what you were getting for it, although if the figures are low it may be his way of covering his expenses

Wammer

Thanks for the replies.

I'm not sure if it is classed as a single fund as there were a list of various funds under an umbrella name.

Apologies for being so vague as we have nothing in writing yet as we are just at the initial stages of discusion and completed a risk profile prior to our meeting last night. We should have a quote by the end of the week with more detail.

This is going to be a steep learning curve, but I am willing to learn. Once I have an idea how it works I think I would be willing to DIY with help from here on how to contact a platform, etc.

BTW the OH and I have roughly 4 years ISAs to transfer. I was keen to get this set up before the end of the tax year so that we could use the S&S allowance for this year as we had only used the cash ISA allowance. However the IFA is steering us towards just transferring what is available in cash ISAs at the moment. Perhaps I need to learn to walk before I can run.

Archi_Bald

If you did transfer all your cash ISAs into S&S, would you still have an easily accessible cash emergency fund?

dunstonh

I don't have a written illustration/quote yet, but the IFA has suggested a platform with Skandia and a fund with Old Mutual(?) although I think he said they are known by a different name.

Skandia investment solutions is owned by old mutual. A rebranding to Old Mutual is in the works. That is just the platform. Not the investment.

There are some old mutual investment strategies on the skandia platform.

BTW the OH and I have roughly 4 years ISAs to transfer. I was keen to get this set up before the end of the tax year so that we could use the S&S allowance for this year as we had only used the cash ISA allowance. However the IFA is steering us towards just transferring what is available in cash ISAs at the moment. Perhaps I need to learn to walk before I can run.

Taking steps rather than plunging in can be a very good thing for a new investor to do.

xylophone

I think that in your situation, I would not not have gone the IFA route.

I would have left my cash ISAs for previous years where they were, and looked to use this year's allowance only, perhaps starting with a lump sum of £1000 and drip feeding the rest in over the year.

I would have done some research about funds to choose and then channelled my investment through a DIY platform.

https://forums.moneysavingexpert.com/discussion/comment/64981205#Comment_64981205 post 2, 5, 6, 9 might be of interest.

Once I had been using a stocks and shares ISA for a year or so, I would have considered gradually transferring over the cash ISAs if appropriate.

However, with investments, it is very much a matter of choosing what makes you feel at ease.

gadgetmind

Wammer wrote: »

The fees mentioned are 2% one off fee for the IFA plus 0.5% annual fee, 0.35% for Skandia and 0.6% annual management charge.

Does this sound like good advice and are the fees reasonable?

The 2% sounds OK if you don't want to do your own research, but those ongoing fees are going to limit your returns if it's really 0.5+0.35%+0.6%=1.45%pa.

Market returns are predicted to be about 5% over the next few years (yes, such predictions mean little, but ...) this means that about one quarter of this will be going into someone else's pocket rather than yours.

Don't get me wrong, this doesn't mean that you shouldn't go ahead, but does mean that you need to keep on researching how to get fees lower, which may mean you need to do some reading.

dunstonh

gadgetmind wrote: »

The 2% sounds OK if you don't want to do your own research, but those ongoing fees are going to limit your returns if it's really 0.5+0.35%+0.6%=1.45%pa.

Market returns are predicted to be about 5% over the next few years (yes, such predictions mean little, but ...) this means that about one quarter of this will be going into someone else's pocket rather than yours.

Don't get me wrong, this doesn't mean that you shouldn't go ahead, but does mean that you need to keep on researching how to get fees lower, which may mean you need to do some reading.

You do have to consider the costs of getting wrong if you DIY badly. Not everyone is cut out to DIY and not everyone has the interest to DIY.

The only difference in cost between the adviser and DIY on the annual is the 0.50%.

jimjames

dunstonh wrote: »

Taking steps rather than plunging in can be a very good thing for a new investor to do.

I can see that. I'm curious why you would not invest this year's allowance first though to avoid losing it and then take the steps for moving existing money? I guess the only reason I can see is if you didn't have enough for this year/next year but the OP doesn't seem to be saying that.