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Hiring an FA

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I've never hired an FA or any profession in the area of finance before but have been advised to do so, as I have about 100k in savings in different places, yet know almost nothing about investing and don't know if what I have done is OK.

How does an PF charge? Someone said 1% but what does that mean? 1% of what? And for how long?

Bundly
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  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    You should get a free first meeting at which your circumstances and aims are discussed and then the costs should be detailed. Ideally speak to a few to see who you might trust and get on with.

    There will normally be an initial charge for setting things up and then an ongoing annual servicing charge, typically initial is 1% to 3% and ongoing is 0.5% to 1%, £100k is at the mid point of the charges so an aim might be £1500 to set up and £500 per year.

    You obviously don't have to commit after the initial meeting, post back with their suggestions and people will give opinions on the proposed advice.
  • bundly
    bundly Posts: 1,039 Forumite
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    Thanks bigadaj.

    So, £2,000 in the first year then £500 a year. With interest rates being so low, would that mean the cost of hiring an FA will be more than any gains I might make from my investments?
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    Costs probably about right, though some ifas will have higher minimums and so won't want your business, they'll either decline the business to set up a higher minimum fee.

    Investment returns have been very good since the gfc, depending on your portfolio annular returns for many people will have been averaging anything up to 10% per year, whether this continues who knows. Investments have performed very well because of low interest rates which have hit cash returns.

    There's of course no reason why you can't diy but you need to do soem research, monevator website is a good start and getting soem basic knowledge will help if you deal with an ifa in any case.
  • bundly
    bundly Posts: 1,039 Forumite
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    edited 12 November 2016 at 5:42PM
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    " the gfc"?

    It is possible that all I would gain from getting an FA is to make enough additional interest to pay that FA!

    I have an account with Hargreaves Lansdown and have put money into their "recommended" funds. Also invested in a SIPP and ISA, Premium Bonds, 123 accounts. Maybe by reading stuff online I can manage without an FA.
  • dunstonh
    dunstonh Posts: 116,697 Forumite
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    So, £2,000 in the first year then £500 a year. With interest rates being so low, would that mean the cost of hiring an FA will be more than any gains I might make from my investments?

    No. Initial costs are ballpark. £500-£2000 on those figures is typical. 0.5% to 1% ongoing. Whilst investment returns will be lower than had you arranged identical holdings yourself, if you are unable to DIY then you wouldnt have picked those holdings. Plus, you would expect to make a lot more than the adviser charge. Not sure why your growth expectation net of charges is so low.
    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.
  • bundly
    bundly Posts: 1,039 Forumite
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    So the FA charges 0.5% to 1% of the money s/he is looking after? The incentive then is that the more my money grows, the more fee they get.

    "Not sure why your growth expectation net of charges is so low."

    Er, well, interest rates are low, aren't they, unless you take a risk on the stock market?
  • coyrls
    coyrls Posts: 2,438 Forumite
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    bundly wrote: »
    So the FA charges 0.5% to 1% of the money s/he is looking after? The incentive then is that the more my money grows, the more fee they get.

    "Not sure why your growth expectation net of charges is so low."

    Er, well, interest rates are low, aren't they, unless you take a risk on the stock market?

    If you're only looking at savings interest rates, you don't need an IFA.
  • bundly
    bundly Posts: 1,039 Forumite
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    coyrls wrote: »
    If you're only looking at savings interest rates, you don't need an IFA.

    I suppose my amateurish, half-formed idea was that I would explain everything I have done with my £100,000 and ask them to check that I have made the right decisions and tell me if there is something better I should have done (and can still do!)

    I feel like I have just done random things without knowing what the hell I am doing!
  • teddysmum
    teddysmum Posts: 9,477 Forumite
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    Have a look at all the interest paying current accounts for a start.
  • bundly
    bundly Posts: 1,039 Forumite
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    teddysmum wrote: »
    Have a look at all the interest paying current accounts for a start.

    Yes, I have done that and have opened three that pay decent interest. I cannot cope with doing what some people do -- opening a dozen and cycling money through them. Doing that with three is enough!


    Has anyone on here actually hired an FA and if so would they recommend it, or urge me to learn for myself and DIY?
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