IFA Quote

DancingBadger

dunstonh wrote: »

you can pay the charge from the fund (and there can be good reasons to do so - e.g. tax relief on the fee), the fee is still paid by you and no-one else.

Would you mind explaining how to get tax relief on the fee, please? Neither of the people we've seen so far have mentioned it; not sure if they aren't aware of it or just don't think it's relevant to our situation.

DancingBadger

saver861 wrote: »

This is the classic chicken and egg problem as far as I am concerned. You don't have enough knowledge so need to ask and IFA - conversely, you need enough knowledge to converse and challenge an IFA's advice, decisions etc.

My own approach is to do the groundwork myself. What I don't understand I need to learn. I can't become an expert of course, but I can put myself in a much more elevated position of knowledge.

I won't necessarily take 'my own advice' but what I will do is establish some form of plan pertaining to my requirements. However, if I felt it necessary, I would then employ the services of an IFA to either 'validate' my plans or to make other recommendations.

That way I would feel I had sufficient knowledge to make my own assessment on whether the information provided by the IFA was worthy and reasonably correct in all aspects.

Not to do so is really putting all your resources in the hands of an IFA. If the advice given is incorrect, or even beyond reasonable risk, costs, etc, etc, then by the time you find that out, it is usually too late.

Exactly our thoughts. We want/need to address our whole pension situation, but accept we don't have the knowledge and/or time at the moment to acquire the breadth of knowledge needed.

Lurking around this forum has helped a lot - certainly in our current quest to find an IFA who won't stitch us up - and I'm enormously grateful to those who take the time to post their knowledge, views and experience. That said, I think simply appointing a third party to manage our pensions is a cop out and ongoing learning is the only way forward. Going it alone at this stage would be foolish and not just a little arrogant; simply asking for trouble.

On the subject of learning, I came across "The Escape Artist" on these forums. His site and its content are inspiring, but I'd be really interested to hear the opinions of others who've come across his site.

gadgetmind

DancingBadger wrote: »

To cut a long story short, he told us that the industry standard for initial advice was 5%, but in view of the amount involved he would be prepared to take us on(!) for a fee of 3% plus 1.25% ongoing fee - so a cool £20400 for the first year alone.

Well, doesn't that all sound very familiar.

dunstonh

DancingBadger wrote: »

Would you mind explaining how to get tax relief on the fee, please? Neither of the people we've seen so far have mentioned it; not sure if they aren't aware of it or just don't think it's relevant to our situation.

Lets say you have a fee of £1000. If you pay by cheque, you write it out for £1000.

However, money in the pension has been placed in there net of tax relief. So, if you take the £1000 from the pension then it is effectively had tax relief on it.

Example:
1 - pay directly - £10,000 into pension is £8000 net. You write a cheque for £1000 to adviser. Total net cost is £9000 to get £10,000.
2 - pay via pension - Increase the gross contribution to £11,000 and its £8800 net. Adviser takes their £1000 fee via the pension. Total net cost is £8800 to get £10,000. £200 cheaper than paying directly.

Even better if you are a higher rate taxpayer.

saver861

DancingBadger wrote: »

Exactly our thoughts. We want/need to address our whole pension situation, but accept we don't have the knowledge and/or time at the moment to acquire the breadth of knowledge needed.

Well it depends on how much time you have before you have to make any firm decisions. Stating the obvious, doing nothing is far better than doing the wrong thing.

DancingBadger wrote: »

That said, I think simply appointing a third party to manage our pensions is a cop out and ongoing learning is the only way forward.

If you take the view that your pension and retirement management is an ongoing thing from the time you actual retire until you kick the bucket, then that ongoing knowledge will be required way past the retirement date.
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Many good IFA's around and no doubt some on here. They will have good knowledge and hopefully spot any pitfalls you may be heading for. That said, IFA's like the rest of us do not have crystal balls and of course, whilst IFA's on here contribute to forums, equally for them it can also be a free marketing tool!!

DancingBadger

We've now met the third IFA - very likeable, no communication problems, seems on the ball, etc...but, but...

He still wants talk in percentages - 2% for the initial work-up and 0.75% ongoing. When we said we preferred an hourly rate he said no problem but the cost of the initial work would probably work out the same as our pensions are "complicated" and will probably take him "at least" five 7-hour days. (His hourly rate is £175, which I make £6,125, not £9,600, which is the percentage charge.) The initial quote from the first IFA indicates a day's work; we gave them both the same information, so I'm a bit concerned at the huge time disparity for what appears to be the same job.

The bottom line is a £9,580 difference in the first year between him and the first IFA.

So we have a dilemma - go with the latest chap and wave goodbye to over £9,000, or attempt to build a workable relationship with the first man.

My gut feeling is, and always has been, the first IFA is the best of the three - based on qualifications, experience and price. The problem we have with him is a personality clash and how to resolve it. He is part of a financial advice firm based in Alton, Hampshire. I doubt I'm allowed to post a link, but I would appreciate input if anyone is willing to do a Google search.

Quite apart from the difference in cost, another problem I had with the adviser we saw this week is that he is older than us. This isn't ageism; what we are hoping to do is build an ongoing relationship with whoever we choose.

I'm not sure how to take this forward. Contact the first IFA and say, quite honestly, he and we might have a personality clash, but we'd like to deal with his firm? Contact the firm directly and speak to another adviser (not my preferred option as it feels underhand)?

Once again, your thoughts would be very welcome.

Mirador

We too have started to try and chose an IFA and had our first meeting today. Offered 0.5% initial fee and then 0.75% of the fund value for ongoing twice yearly reviews. I explained that I was looking to switch funds to an SIPP, but this advisor said I definitely needed a platform for my fund And that if I want to go the SIPP route I don't need an IFA?

atush

Why not go back to him and do NOT ask for an hourly rate (I think that was a mistake) but instead ask for a fixed fee.

Or why not ask him why, when the industry average is 1.8% and ongoing 0.5% does he think he is worth charging more? Too confrontational for you?

Offer him 6K with 0.5% ongoing and see what he says?

dunstonh

I explained that I was looking to switch funds to an SIPP, but this advisor said I definitely needed a platform for my fund And that if I want to go the SIPP route I don't need an IFA?

Most platform pensions are SIPPs. So, its difficult to see what the difference is.

If you intend to self invest though, then why do you need an IFA?

jem16

DancingBadger wrote: »

My gut feeling is, and always has been, the first IFA is the best of the three - based on qualifications, experience and price. The problem we have with him is a personality clash and how to resolve it. He is part of a financial advice firm based in Alton, Hampshire. I doubt I'm allowed to post a link, but I would appreciate input if anyone is willing to do a Google search.

Go back and have a second discussion with the first IFA. You need to communicate with him, tell him your concerns and see where it goes.

atush wrote: »

Offer him 6K with 0.5% ongoing and see what he says?

£6k initial fee seems far too expensive to me.