IFA charges / trail commission etc.

Rhymsta

I am just about to undertake a review of my and my wife's finances and would like to be a bit more clued up on how the change to the ay IFAs get paid will affect us.

In the dim and distant past we bought several with profit bonds. We managed to ditch the zombies along the way so have about 5 remaining the biggest is in a Prudence Bond.

These are set up to pay out 5% of the initial investment each year.

When we bought these we had most of the initial commission rebated and used to buy more units in the bonds. The adviser was going to be paid a commission each year that we held the bonds.

Would this 'trail' commission have been affected by the new rules?

I am now 55 and have a SIPP with Standard Life which has half in a SL with profits fund and the rest in equities (unit trusts etc). This was set up by our IFA and their name shows up when I log on.
I was thinking of transferring over to Hargreaves Lansdown and taking advantage of their cash back offer. If I do this myself would the link with my IFA be cut?

Up til last year we always got a comprehensive breakdown and valuation from our IFA of everything held through them but didn't get this this time. We also had review meetings for which we were not charged anything extra but these have stopped.
Any correspondence we get is signed by a very lowly member of the firm rather than a top man as previously.

Basically, we now have the time to sort out my our affairs and am not receiving any advice !but before I attempt to cut free was wondering if there are any implications to doing so?

sandsy

Trail commission on existing products is unaffected by the new rules and is most likely still being paid to your adviser. It is therefore possible for advice to be provided on those products without explicit adviser charges being levied.


However, any advice discussions relating to possible new investments would be subject to explicit adviser charges as commission wouldn't be payable on any new products.


If you transfer out of an existing product, any trail commission payments will stop.

Rhymsta

Thanks sandsy that all makes sense and is what I was hoping to hear.

Lokolo

Charges may be higher and HL charge platform fees. So you could end up worse off. However you can stick with your IFA and ask him to switch to clean funds which won't pay comission.

Linton

The Prudence bond paying 5% is one of the better With Profits around. I have held them for 12 years now and dont plan to sell. In my view it's a reasonable steady return and justifies taking higher risk with other investments.

dunstonh

I have a number of Pru bonds on my books that you just cant justify getting rid of. Yes, they are old fashioned and many people say they dont like them (generically rather than specific to pru) but you find they do exactly what they are meant to do. Rain or shine. The current available versions are not as attractive as those available 5-10 years ago but dont get rid of a Pru bond unless you have good justification to do so.

Rhymsta

Thanks folks.... Yes no intention of ditching the Pru Bond as it has, and continues to perform really well.

I know all with profit bonds tend to get tarred with the same brush but in the main even those from AXA / Sunlife are still worth between 30 and 40'k even after over 10 years of 5% withdrawals - the initial investment was 25k in each (with some enhancement due to rebated commission).

The only ones we've got that have decreased in value have been with Liverpool Victoria. Bought those in the vain hope of a windfall.