IFA Charges

Gra001

About to appoint a new IFA, portfolio value (£1.5M) spread across pension, ISA's, stocks/shares, cash, seeking advice on what I should expect to pay him/her. I envisage some of the portfolio remaining with the same provider/s with no change necessary and the rest including cash moving. So, three questions really
1) Is there a charge on the funds that are moved including the cash, if so what might it be?
2) Is there a charge for just taking over a fund, no transfer, if so what might it be?
3) Should there be an annual charge on each fund, if so what might it be?
Thanks, appreciated!

dunstonh

1) Is there a charge on the funds that are moved including the cash, if so what might it be?

There are around 20,000 advisers. Each with their own charging structure. You will need to ask your one what their charges are. There is standard charge across the industry. Some will be expensive. Some will be cheap. There are prestige firms who will charge (perhaps due to location - city firms tend to cost more for example). There are others that are priced on certain target markets and if you are outside of that target market, the price may not be good for you.

2) Is there a charge for just taking over a fund, no transfer, if so what might it be?

Again it varies. However, if you are employing them on an ongoing basis and want advice on assets under their advice "management" then you would expect the charge to be applied across all assets to avoid any potential for bias.

3) Should there be an annual charge on each fund, if so what might it be?

If you employ them on an ongoing basis then the charge should be equal across all assets to avoid any perception of bias. 0.5% p.a. is a common figure for ongoing servicing but you may be able to get a fixed fee p.a. given your amount. However, it would largely depend on what sort of service you want.

innovate

It's a bit bizarre, with all this transparency going on in the investment world, that IFAs and FAs still can charge whatever they like. Only limitation appears to be how much each client is willing to pay.

http://forums.moneysavingexpert.com/newreply.php?do=newreply&noquote=1&p=65515858

jem16

innovate wrote: »

It's a bit bizarre, with all this transparency going on in the investment world, that IFAs and FAs still can charge whatever they like.

Would you rather they operated a cartel like the big 6 Energy firms where they all follow each other putting their price up?

I wouldn't expect every plumber, every electrician or every lawyer to charge the same for their services as each other, so why expect an IFA to do so? The whole point of transparency is that you know what is being charged for each part of the service and then you can decide whether or not to pay that or go elsewhere, just like every retail business (apart from the Energy firms of course!)

innovate

jem16 wrote: »

Would you rather they operated a cartel like the big 6 Energy firms where they all follow each other putting their price up?

Certainly not, no, but I equally wouldn't want to be outwitted by several thousand folks who are ahead of me in their financial education. I don't fancy to be exploited by any sort - be they an informally recognised cartell or just an informal body of people who are financilly more astute than me, for whatever reason.

You seem to be offering a choice of getting exploited by big boys or small boys. Neither of which appeals to anyone.

jem16

innovate wrote: »

You seem to be offering a choice of getting exploited by big boys or small boys. Neither of which appeals to anyone.

Not offering, or even advocating, that choice at all.

The point is, like every other retail service, they are able to set their own charges. With transparency after RDR everything is set out clearly from IFA charge, platform charge and fund charge. It is then up to the customer to decide if the service that they offer is worth it.

You could just as easily be exploited by a plumber as an IFA but I don't expect you to say that plumbers should all charge the same.

Aegis

Gra001 wrote: »

About to appoint a new IFA, portfolio value (£1.5M) spread across pension, ISA's, stocks/shares, cash, seeking advice on what I should expect to pay him/her. I envisage some of the portfolio remaining with the same provider/s with no change necessary and the rest including cash moving. So, three questions really
1) Is there a charge on the funds that are moved including the cash, if so what might it be?
2) Is there a charge for just taking over a fund, no transfer, if so what might it be?
3) Should there be an annual charge on each fund, if so what might it be?
Thanks, appreciated!

Without actually looking at your financial circumstances and assessing the level of complexity together with your goals and risk tolerances, I can't even tell you what I would charge, let alone another IFA.

Apologies, I know this is not very helpful, but at £1.5 million of investments you will likely fit into the truly bespoke end of the scale for any IFA and therefore you'll receive a wide range of possible charges depending on what you want from the adviser(s).

cgzz

The FCA should insist that IFAs on their register should declare their hourly rate and this should be viewable on every IFAs registered details (including all qualifications as well). Of course this would need to be updated yearly but it would give the general public the knowledge of what an individual IFA will charge before even approaching them. The public could then shop around which is very difficult when it is necessary to approach each IFA to find out what they charge. It would hopefully introduce charging competition and help eradicate some of the extortionate and unregulated rates being charged.

jem16

cgzz wrote: »

The FCA should insist that IFAs on their register should declare their hourly rate and this should be viewable on every IFAs registered details (including all qualifications as well).

It could be a possible addition to their details but would it really help a prospective customer know how much it would cost as they wouldn't have a clue how much work is involved? I wonder how many clients choose the hourly fee option?

I know when I want to know how much a lawyer would charge for conveyancing, I'm not really interested in an hourly fee but simply want a quote for the whole job.

Qualifications seem to already be viewable on https://www.unbiased.co.uk.

Aegis

cgzz wrote: »

The FCA should insist that IFAs on their register should declare their hourly rate and this should be viewable on every IFAs registered details (including all qualifications as well). Of course this would need to be updated yearly but it would give the general public the knowledge of what an individual IFA will charge before even approaching them. The public could then shop around which is very difficult when it is necessary to approach each IFA to find out what they charge. It would hopefully introduce charging competition and help eradicate some of the extortionate and unregulated rates being charged.

Just what we need, more compliance! My hourly rate (if desired) is already available to prospective clients if they ask me for it, as are my qualifications. So far I have been asked to work on an hourly rate once and have never been asked my qualifications, so this would be an unnecessary additional cost levied by the FCA which would serve to push prices up further.

Extra regulation isn't necessary. If someone wants to deal with an adviser that publishes an hourly fee on their website and guarantees to stick by them, such providers already exist. Otherwise it's like any other professional service: a bespoke quote is available on request.

jimjames

jem16 wrote: »

It could be a possible addition to their details but would it really help a prospective customer know how much it would cost as they wouldn't have a clue how much work is involved? I wonder how many clients choose the hourly fee option?

I know when I want to know how much a lawyer would charge for conveyancing, I'm not really interested in an hourly fee but simply want a quote for the whole job.

It does seem to be picking on IFAs suggesting things like that. If we go down that route then every plumber on the Gas Safe register should have to show their prices, any builder or any photographer offering weddings. For any trade there are a wide range of providers and services they offer at a range of prices.

As with anything I'd suggest getting a few quotes and then going with the one you are most happy with, which may not be the cheapest. There seems no need to have any regulation to specify what people can charge for a service.