Fees from Wealth Management Company

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Hi all,

As part of our autoenrolment we had a meeting with the company that are to be dealing with it. They also offered a free private consultation for personal finances. It was fairly useful and at the end of it they sent a summary of fees.

I do try to understand fees and investing a little but still do not have the best knowledge. My girlfriend has little to no experience. The fees that are quoted are below. I would be grateful if the more experienced heads could have a look at it. At the moment I have a private pension with Cavendish online which I know is cheaper but I sort of like the idea of having someone in charge of it since I am a little clueless. The ISAs do not sound particualry attractive in any event since I am a HRT payer and therefore as I understand it pensions are likely to be a better way forward (especially as I do not need the money, have a house etc):

For ISA's there is an initial one off charge of 5% on all new invested money. Therefore there is an annual management charge (AMC) of 1.25% and a fund manager fee usually around 0.5% however depends on the portfolio we choose. This would be discussed on recommendation. The AMC and fund manager fee or taken daily, you don't actually see them come out as the come off the unit price. Therefore when you log on line to see you balance the figure you see is what it is worth. There are no exit charges and your money can be returned within a week of requesting an encashment.

With regards to the pension, there are no initial charges on a pension as they tend to be a lot longer term. The AMC is 1.5% and again fund manager charges on top usual about the same as the ISA. These work in exactly the same way I.e. Daily charging. The pension has a 6 year exit fee, therefore if you were to move it to another provider within 6 years the charge is reducing, in year 1 it is 6% and reduces by 1% a year thereafter.

With regards to tax planning this is all part of the service, as are annual reviews to look at any changes recommended, new legislation that may affect you etc etc. We can also switch funds if appropriate and this is at no additional charge up to 20 switches per year.
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Comments

  • Jaguar_Skills
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    I should add, that after a trip I am going on (away for a month) I also have a meeting scheduled with another Financial Adviser to compare rates. If anyone needs any further details about investments/finances that we currently have please shout and I will outline them.
  • dunstonh
    dunstonh Posts: 116,637 Forumite
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    For ISA's there is an initial one off charge of 5% on all new invested money.

    That is extremely high unless you are only investing around £10,000. If it doesn't taper off very quickly after that then its expensive.
    Therefore there is an annual management charge (AMC) of 1.25% and a fund manager fee usually around 0.5% however depends on the portfolio we choose

    That seems very high for 2016. Managed funds tend to be under 1% all in and trackers around 0.1%. Your levels are similar of those 5 years ago.
    The pension has a 6 year exit fee, therefore if you were to move it to another provider within 6 years the charge is reducing, in year 1 it is 6% and reduces by 1% a year thereafter.

    It is extremely rare to have a pension (or any investment for that matter) with exit charges nowadays. Indeed, I am struggling to think of a provider off the top of my head that has exit charges like that.

    Is this firm an IFA or restricted adviser?
    Is it a firm aimed at high net worth clients and do you fit their model (often these firms price fairly for large amounts but price very high for small amounts to effectively act as a blocker as they dont really want you but if you use them then you pay a lot more for it).

    Is the investment a mainstream one? (thinking as to why there is an exit penalty which you just dont see on conventional mainstream stuff).
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Jaguar_Skills
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    Thanks Dunstonh. This is St James Wealth Management so it may be that it is for more significant investments. Cutrrently I have very low charges with mhy pension provider although I am just invvesting in two funds and not 100% sure it is the most efficient. The charges to me also sounded high and didn't outweigh what I am being charged elsewhere so I am reluctant to switch.
  • PeacefulWaters
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    Slick. Expensive.

    Where's the value for you?
  • jimjames
    jimjames Posts: 17,676 Forumite
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    edited 31 March 2016 at 12:11PM
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    Thanks Dunstonh. This is St James Wealth Management so it may be that it is for more significant investments. Cutrrently I have very low charges with mhy pension provider although I am just invvesting in two funds and not 100% sure it is the most efficient. The charges to me also sounded high and didn't outweigh what I am being charged elsewhere so I am reluctant to switch.
    If you search this forum for St James Place then I think you'll find lots of feedback. Most will have the same assessment as you've had here and appear to have realised yourself. They are very expensive and will get rich on your behalf. I certainly wouldn't move any pension or other funds to them especially for 5% initial charge.

    The pension fees sound very high for a corporate scheme if the total is around 2%. Can you persuade your company to look at one that is more reasonable if it's one they contribute to as well? As an example our corporate autoenrolment scheme charges a single fee of 0.54% for both AMC and fund charge. So almost 1.5% more money is going into your pension.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • dunstonh
    dunstonh Posts: 116,637 Forumite
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    This is St James Wealth Management so it may be that it is for more significant investments.

    er no. SJP is a tied salesforce operating a very expensive model with slick presentation. An IFA can wipe the floor with SJP every time. Indeed, they hold the record of the largest cost saving I have made a client on a product transfer. Over £300,000 in charges over the term.

    What is it about SJP that makes an expensive tied salesforce appeal to you compared to an an IFA? Do you have enough money invested to make an IFA suitable or is DIY the best option?
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • jimjames
    jimjames Posts: 17,676 Forumite
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    dunstonh wrote: »
    What is it about SJP that makes an expensive tied salesforce appeal to you compared to an an IFA? Do you have enough money invested to make an IFA suitable or is DIY the best option?
    I'm assuming from the OP that it's purely because that was the option introduced to them by their employer. As per my reply I think it seems a very expensive auto enrolment scheme they're being signed up to, wonder if the company get anything from SJP for it?
    Remember the saying: if it looks too good to be true it almost certainly is.
  • ColdIron
    ColdIron Posts: 9,161 Forumite
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    For ISA's there is an initial one off charge of 5% on all new invested money. Therefore there is an annual management charge (AMC) of 1.25% and a fund manager fee usually around 0.5%
    Ouch
    This is St James Wealth Management
    As sure as night follows day

    Nothing wrong with their funds just very very expensive
  • talexuser
    talexuser Posts: 3,500 Forumite
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    I haven't paid a one off 5% initial charge on any funds since the early 90s nearly 25 years ago. It will take a couple of years to get back to the value you started, longer with those expensive annual charges too. Must be one of the worst value platforms you could invest in.
  • dunstonh
    dunstonh Posts: 116,637 Forumite
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    talexuser wrote: »
    I haven't paid a one off 5% initial charge on any funds since the early 90s nearly 25 years ago. It will take a couple of years to get back to the value you started, longer with those expensive annual charges too. Must be one of the worst value platforms you could invest in.

    It isnt a platform. Its a tied provider retailing its own product through a tied sales force.

    It's an upmarket version of the man from the Pru but charging more.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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