Initial Costs for IFA....

savdefriz

My wife and I luckily have a windfall to invest towards our retirement and kids university fees etc.

We were looking to invest a sizeable chunk in a medium risk investment portfolio for ourselves, and two smaller chunks into a similar fund for each of our two children.

We sought some financial advice but we feel that the costs are expensive. The advisor explained that there would be a 2.66% charge on initial setup along with a 1% ongoing charge. The product itself would have a 0.25% setup charge with an ongoing 0.7% projected fee.

We feel that these costs are excessive (especially compared to a product like Nutmeg) but I can't find costs of other advisers online to compare with. (Except Santander charges 2.5% setup fees).

Am I right in thinking that this is expensive?

Thanks

SDF

dunstonh

How much are you talking about as percentage charges mean nothing without context.

e.g. 2.66% on £200k is high. However, 2.66% on £50k is fine.

1% ongoing on under £100k is common. Above 100k then 0.5% is more common.

We feel that these costs are excessive (especially compared to a product like Nutmeg)

hardly like for like.

but I can't find costs of other advisers online to compare with. (Except Santander charges 2.5% setup fees).

Never use banks.

Am I right in thinking that this is expensive?

impossible to say until we know the amount.

xylophone

Do you intend to use your children's JISAs?

savdefriz

To give a little more context:

My wife and I have just short of £100k in ISA accounts that are only achieving 1 - 2% interest. We have no mortgage or other debts. We also have £60k that we would like to use to invest for kids (30k each).

The idea was to transfer the ISAs over from Cash to Stocks and Shares. The other 60k we would invest in a general investment account, transferring our ISA alowances over the next two tax years. Then each yer we could drip feed from our accounts into the kids ISAs.

Hope that puts it in context.

SDF

dunstonh

The charge is not unreasonable base on the new information. You could get a little cheaper towards the £1000-£1500 mark but its within the ballpark.

savdefriz

£1,000 to £1,500 isn't a little cheaper it's a hell of a lot.... 2.66% of £160,000 is £4256, and 1% a year as opposed to 0.5% would be £800 extra a year without growth.

(Or have I missed something?)

dunstonh

(Or have I missed something?)

No it was me. I read it as £60k plus ISAs (so just under £100k).

Based on £160k, then yes, the initial is expensive and you should shop around with £1000-£1500 being your target.

savdefriz

Thanks dunstonh I just don't like the thought of being ripped off.

SDF

noggin1980

Or spend a day reading sites like monevator and do it yourself

xylophone

Assuming that you are happy that the children will have the right to access age 18, you might fully fund at the beginning of each tax year?

Are the accounts already in existence so that you have already chosen the investments?

If you are confident about choosing your own investments you could DIY?

savdefriz

I am moving towards the idea of using a platform and going DIY, there is just a lot to take in to begin with. The kids money is at the moment in CTFs so I have to apply for them to be transferred across before we can use their allowances. To take the hassle out of things I was also looking at a hybrid site like Nutmeg..... Lots to think about, but suffice to say that I won't be using that IFA with his expensive charges. 1% initial and 0.5% ongoing I think I could understand....