Initial Costs for IFA....

bigfreddiel

Pincher wrote: »

Hire an old financial advisor about to retire for his license only.

Do an online fact find form so the client does all the work.
The client pays £100, and we send him a document pack that cautions against poverty in retirement, but recommends transfer out the pension pot at age 55. Obviously, the client must sign a form that says he is happy with the recommendation, and will never ever sue or complain.

Five years down the line, the old FA (short for do F**K A*L) retires, and disappears to the Bahamas. The website disappears, too. Tax payers pick up the bill for pension credit and care costs.

Is that any better?

The whole concept of handing control of your money to somebody else to manage is suspect. At the multi-million pound level, there is no need to act fraudulently, as 0.5% is enough to make a living on. On a piddling amount like £50,000, who is going to bother to glance at your petty problems for £100?

Great post especially the FA acronym!

bigfreddiel

Aegis wrote: »

So in your world someone going to an IFA for their first thousand pounds should have the maximum possible fee from that IFA, while someone investing £10 million and requiring a large number of different investment vehicles and strategies should be charged a much reduced fee?

Previously I've generally understood your comments, but this is just bizarre.

See my reply a few above to Masonic. I thank that makes sense

fj

AndyT678

bigfreddiel wrote: »

With a portfolio of investments it's as as easy and just as risky to handle £100,000 as it is to handle £100,000,000

I think you are confusing investment risk and business risk. The IFA's professional liability insurers will certainly care whether there is £100,000 or £100,000,000 under management and will charge very different premiums.

sl_jones

To take the hassle out of things I was also looking at a hybrid site like Nutmeg.....

Hold on, you said that you had around 100K to invest, then Nutmeg will only charge you 0.6%? As they base there fees on how much you put away.

I am similar to you i don't want to be sitting at my computer all day wondering if i have made the right investment choice, i want someone to do that for me. I currently have an ISA with Nutmeg and my OH has one with Foresters as they are both pretty balanced and i won't loose everything if the stock market crashes.

jem16

bigfreddiel wrote: »

With a portfolio of investments it's as as easy and just as risky to handle £100,000 as it is to handle £100,000,000 so I would expect to pay a flat rate.

And when you make your complaint of mismanagement, will you be quite happy to be compensated to the value of £100k as opposed to your portfolio value of £1m?

With the comment you have just made it does rather confirm that you don't have a clue what is involved with running an IFA business.

Al.

Jem shoots, he scores.

Freddie, out of interest, what's a fair flat rate? Should someone with an intricate portfolio and needs and still pay the same as someone with much less, and far simpler circumstances?

savdefriz

It seems that I have indeed provoked some discussion.....

Just so that everyone is aware, I have no problem with paying a "decent" fee to an IFA. My problem was, as I had only spoken to one IFA I had nothing to use as a comparison. I felt that the initial setup fees were high (2.66%), and that for a pretty simple portfolio 1% ongoing was also high. Bear in mind that I had no benchmark with which to compare this. My question simply stemmed from the fact that the "product" that I was advised upon was only predicted to pay 6.93% annualised and the fees would eat into that amount significantly.

I would have no problem with an IFA taking 1% if it meant that I was going to get a higher rate of growth, but I just felt that the extra level of charges were not proportional.

SDF

Al.

Don't fixate on high rates of growth; rather, what do you want to achieve, what risk are you happy with and if there a mismatch that requires you to take more, or allows you to take less risk, should you attach a longer time window or should you save more (or less)?

Taking risk for the sake of it will cause you to lose sight of your objectives. The reduction in yield is important - what's the impact over time? Vital stuff to consider.

masonic

bigfreddiel wrote: »

As insurance is based on value I expect to pay more after all it's physical stuff you're insuring.

With a portfolio of investments it's as as easy and just as risky to handle £100,000 as it is to handle £100,000,000 so I would expect to pay a flat rate. I would even go for a percentage fee that maxes out at a portfolio of £500,000. That then would be the fee for portfolios above £500,000

Cheers fj

I think jem16 has pretty much debunked this, but if you just want to go and have a chat about your plan with an adviser and then trot off to a DIY platform and execute the resultant plan at risk, then I'm sure you could do that on an agreed hourly rate that doesn't depend on how much money you have to invest.

dunstonh

Tax payers pick up the bill for pension credit and care costs.

Why would the taxpayer foot the bill? The FSCS would foot the bill.