Financial Advisor meeting

berbatov10

I am meeting with an IFA tomorrow to discuss investment of £250 K pot. What sort of interest/income would be realistic to expect from such a sum

Aegis

berbatov10 wrote: »

I am meeting with an IFA tomorrow to discuss investment of £250 K pot. What sort of interest/income would be realistic to expect from such a sum

The unhelpful answer is "it depends". You'll need to ascertain your risk profile, timescale and tax situation before even making an estimate.

berbatov10

I would say I have a medium risk profile, I have put myself in a good position and dont want to lose it all. I am just (by £10K) a higher rate tax payer and I would be looking to gain a regular income from in it 5 - 10 years time

saver861

berbatov10 wrote: »

I am meeting with an IFA tomorrow to discuss investment of £250 K pot. What sort of interest/income would be realistic to expect from such a sum

In honesty, thats not the sort of question you should be asking at this stage!!!

My view is always that people should have as good as possible understanding of what they want to do with their money before meeting an IFA. Your discussion with the IFA will then be more meaningful in that you will have at least some idea of where they are coming from and whether the information provided is reasonable and valid.

If you have not done your homework at this stage, then your meeting tomorrow will be a lot less useful than it might have been.

berbatov10

So I had a meeting with an IFA this morning. I was happy with how it went and he asked the sort of questions I would have thought relevant from the various posts on here, I cannot say just how helpful this site is. His charge for 'actively' managing my fincial portfolio is .85% of the total sum. He offers a service where he invests and reviews it annually for .50%. He has asked me to go away read the literature he has given me, he uses a platform called Transact who I had not heard of and decide if I wish to use him. He did show me his own portfolio which he said like other clients had done exceptionally well in the last 2 years,but with a note of caution that may not be replicated. What are your thoughts about charges and platform he uses?

EdGasket

So its a choice between 0.85% or 0.5%? Doesn't sound too bad though you could invest it yourself in some unit trusts that are actively managed anyway and some ETFs that passively manage themselves i.e. they track an Index. I guess it depends whether you trust this guy or not. Is his 'active' management going to be better than an Investment Trust's management?
Personally, unless it was someone I knew a lot about, I would not be trusting them with £250K; rather do it myself.

berbatov10

Ed thats what Iam wrestling with. To be fair he has said that I should not just hand him £X and let him get on with it, in fact he was the opposite and 'to see how the investments perform'. What I have noted is that the literature he gave to me oulined how the effect of fees on investment mean that an average 6% . return would mean I get about 3.89%. I do know him and have for sometime. I know of another person he handles funds for as aswell who is happy with his service. I can get away from the thought 6% is 'diminished to 3.89%.

EdGasket

How does 6% get reduced to 3.89% if the fees are only 0.85% pr 0.5%? You need to understand the charges better. Making a consistent 6% gain would be a challenge in today's markets so if he only produces a flat return you'd be losing 2.11% pa in charges.

Also would he propose investing all 250K now in one go or spreading it out over the year to benefit from pound cost averaging? Markets are high right now and often suffer a setback in May so I would not want everything invested right now.

noggin1980

There must be other fees involved for 0.85% to change 6% to 3.89%

personally I'd read the monevator site and Tim hales book and do it myself, you don't need to know much at all to get the average market return -0.6%, so if the market goes up 6% you get 5.4%. You just need to work out your risk profile etc.

If you don't want to be involved at all you can go straight to vanguard and buy a lifestrategy 80 or something for 0.24% total cost.

jimjames

EdGasket wrote: »

How does 6% get reduced to 3.89% if the fees are only 0.85% pr 0.5%? You need to understand the charges better. Making a consistent 6% gain would be a challenge in today's markets so if he only produces a flat return you'd be losing 2.11% pa in charges.

You're missing out the platform and fund costs.

The IFA may charge 0.85% but the fund is probably 0.75% and platform might be another 0.25-0.5% on top too.

noggin1980

Perhaps he is chargeing 0.85% buying funds charging 1%+ish on a platform chargeing 0.45% and then throwing in some share dealing charges too.