IFA Charges 2% For Investing in Structured ISA - How Does This Compare?

AmberStripes

Hi all,

I have used an IFA for a number of years and have never been charged for advice. I understand the IFA has been paid a commission from the financial providers.

Recently a structured ISA product matured. My IFA suggested a new one in which to reinvest the funds.

His recommendation was accompanied by an invoice for 2% of the investment. Is this normal? Is the 2% charge excessive compared to the norm?

I'd be grateful of any advice.

dunstonh

I have used an IFA for a number of years and have never been charged for advice.

You have always been charged for advice. The only difference is that before it was built into the product charges whereas now it is explicitly agreed.

His recommendation was accompanied by an invoice for 2% of the investment. Is this normal? Is the 2% charge excessive compared to the norm?

It is normal to agree the fee in advance. However, yes it is normal to have a fee. Otherwise the IFA will not earn anything. They are not going to do it out of love.

bowlhead99

Also, if you receive a separate invoice for the advice service, that's more efficient than paying a fee out of the value of your asset because it allows more of your ISA allowance to be used for actual investment.

Whether the 2% is a large or a small amount of actual money compared to the amount of work he did to match the product to your needs, or compared to the range of returns you would experience in navigating the investment waters yourself, is not something that we can answer from afar.

Probably the best time to have asked about what fee to pay was before you asked him to do the work and signed up to his fee rate. Or perhaps he is only going to charge you the full 2% if you go ahead with the advice? That charge structure would lead to a higher price because he does work without certainty of getting paid for it.

AmberStripes wrote: »

I'd be grateful of any advice.

If you're grateful for his advice, pay him...