What are considered reasonable IFA charges?

bigadaj

TheTracker wrote: »

For me investment is not about opinion or subjectivity at all. It's about science and objectivity. Until IFAs believe that they'll be closer to homeopathy than plumbing.

Not sure I agree. If you are someone with objectivity and the ability to analyse and assess risk and return, volatility etc then you probably have less need for an ifa. Someone who needs to use an ifa not only needs their skills in terms of cash flow analysis, investment returns, appetite for loss etc also need to communicate that to their client in a way that suits that individual.

Those of us that are cold and clinical are happy to diy!

bigadaj

bigfreddiel wrote: »

I cannot believe that an IFA Would give an uncompetitive quote if they weren't interested. Surely the honest way would be just to explain why they wouldn't take you on as a client.

Cheers fj

I'm very used to letting contracts and getting silly quotes back from contractors because they are too busy, don't want the work or deem it to be risky. This convention in construction has been adopted as many think that if you refuse to tender you won't get an opportunity on the next job, which may or may not be true. This obviously isn't relevant to retail trade with consumers, but as stated fees aren't soemthing which is regulated so is an opportunity to hit a minimum fee level that the advisor considers to be appropriate. Firms will also price on the basis that things like their pi insurance can cost a certain amount per job or client, so a minimum fee is appropriate for this as well.

dunstonh

TheTracker wrote: »

For me investment is not about opinion or subjectivity at all. It's about science and objectivity. Until IFAs believe that they'll be closer to homeopathy than plumbing.

So, if its not subjective or opinion then everyone should be investing the same as you?

_pete_

I have had a rather mixed experience of IFAs in the past. In spite of using only people who have been recommended by friends I found that one had invested me well above my risk level and the next one was charging me an annual fee of 0.5% in return for which I spent one hour each year sitting in his office while he struggled to find my details on his computer.

When I ditched the latter guy I decided I needed to become a more informed consumer so I did a fair bit of reading including 'Smarter Investing' by Tim Hale, and 'Investing Demystified' By Lars Kroijer along with a range of internet sites such as this one and Monevator.

I concluded from this that I am a medium risk investor and that I would be most comfortable investing my pension money in a range of tracker funds or a product such as the Vanguard 60/40. I decided that I needed someone to help me set up this arrangement and then be available for ongoing reviews as and when I felt I needed them (I anticipated that this would be perhaps every 5 years or so rather than annually).

Having decided on this strategy I interviewed 3 IFAs and asked them how much they would charge to carry out this work. There was a huge variation in the prices they quoted (£800-£4000). I chose the guy who had quoted £800 mainly because he had actually understood precisely what I was asking for. He did exactly what I wanted, and for the price we agreed.

So, in a nutshell, I am suggesting that (a) it's important to do your own research in investing before approaching IFAs, then (b) be very clear what you want from them.

I wish I come to this realisation 20 years ago.

pinkforfloyd

Thanks to all as always for the excellent advice and opinions.

_pete_: I may be forced down that route as you appear to be a mirror of what risk I and can tolerate. I will read your suggestion and see if I gain a better understanding. Thanks.

Malthusian

I cannot believe that an IFA Would give an uncompetitive quote if they weren't interested. Surely the honest way would be just to explain why they wouldn't take you on as a client.

True, but people don't like honesty. They take offence if you tell them "You are too poor" or "You are too debt-happy*" or "You will probably drive me and my staff up the wall with constant phone calls and complain to the FOS the moment the markets go down". So the go-away quote saves embarrassment all round.

(*apparently feqless is a swearword on these forums - lol)

Brightspark87

Hi I would charge a financial planning fee rather than just a fee to move your pensions. Can I suggest you look for a financial planner rather than just an IFA? Then you know the advice you are paying for is for the planning not just selling you a pension or product at the end of it.

jem16

Brightspark87 wrote: »

Hi I would charge a financial planning fee rather than just a fee to move your pensions. Can I suggest you look for a financial planner rather than just an IFA? Then you know the advice you are paying for is for the planning not just selling you a pension or product at the end of it.

I thought we had ascertained that the OP is not transferring a pension but organising Drawdown.

Presumably the fee being quoted is the advice fee for implementing a Drawdown strategy and has nothing to do with selling a pension or product as you put it and is something that "just an IFA" can handle without any bother.

dunstonh

Brightspark87 wrote: »

Hi I would charge a financial planning fee rather than just a fee to move your pensions. Can I suggest you look for a financial planner rather than just an IFA? Then you know the advice you are paying for is for the planning not just selling you a pension or product at the end of it.

Strictly speaking, all advisers should be pricing the same as you are. The fee should be made irrespective of the advice. Even if the advice it to remain in place. However, some may decide to waive the fee if they find no value in changing what is already in place very early on in the process. So, I do agree with you in concept but advisers choosing to waive the fee if the work stops early and no further advice is required is not a bad thing.

I am not sure someone calling themselves a financial planner or someone calling themselves an IFA is a good enough filter as many restricted advisers use the financial planner tagline and could charge the fee only on transfer.

Brightspark87

jem16 wrote: »

I thought we had ascertained that the OP is not transferring a pension but organising Drawdown.

Presumably the fee being quoted is the advice fee for implementing a Drawdown strategy and has nothing to do with selling a pension or product as you put it and is something that "just an IFA" can handle without any bother.

But this might not be the best advice! Thats why its important to look at the whole situation and charge a fee based on the planning rather than advice.

Of course anyone can call themselves a financial planner but its how they present this thats important