IFA charges?

fisibs

Hello, I'd be very grateful for some sound practical advice, but keep it simple! Financial jargon is confusing and intimidating (ie, what is a tax wrapper?!)

I opened a S&S ISA through an Independant Financial Advisor 5 years ago. It's grown slightly, but they're now recommending changing it to a different portfolio provider, and adding more savings (which I have languishing in a very poor basic savings account). However there will be a charge for this, plus annual fees thereafter. The fee is minimal but I object to paying charges and fees for my savings! Would it be worth finding another IFA for a 2nd opinion? All I want is a decent fee-free return on my hard-earned saved money..... Would I, in fact, be better off, finding a good cash ISA and setting it up myself? Also, what's the investment limit on cash ISAs, how many can you have?

Any advice would be much appreciated.

Thanks

dunstonh

The fee is minimal but I object to paying charges and fees for my savings!

Everything has charges. Even savings accounts. Some you see. Some you dont. No-one is doing this out of love.

Would it be worth finding another IFA for a 2nd opinion?

No. If you don't want to pay explicit charges then no IFA is going to be of use to you.

All I want is a decent fee-free return on my hard-earned saved money..

Put it in a savings account then. It wont be fees free as savings have higher charges than investments. However, you cant see the charge on the savings and that will make you feel better. You can then earn 1% with no explicit charge instead of say 5% after 1% charge.

Would I, in fact, be better off, finding a good cash ISA and setting it up myself?

Probably. You wont make as much but you will feel better.

Also, what's the investment limit on cash ISAs, how many can you have?

£15240 and as many as you like as long as you only contribute one per tax year.

JohnRo

It sounds to me like they're churning your account. It's a real shame you've only seen slight gains over the last five years though, assuming you're holding equity investments.

How much and what is in the S&S ISA?

What are the current IFA charges and the new ones they're proposing?

ermine

How much is in it? What return have you achieved over 5 years? When you compare it with the FTSE100 total return (very vaguely approximated by this do you feel happy or sad). If happy, eat the fees, if sad, read this

There's nothing wrong in paying an IFA, but if you come out not quite sure why the hell you've been paying him and whether that was a good idea or not then he's not the right IFA for you The whole point of a IFA is to educate you as to whether your results are broadly likely to match your proposed actions.

Markets have been on a tear looked at over the last 5 years. You should have got some of that!

fisibs

Thanks for yr reply.
Initially invested £20,000 with Old Mutual Wealth portfolio which has eventually, after an initial drop, grown to just over £23,000 in 5 years. IFA has prepared new portfolio to an Aviva platform, to transfer the £23000 plus the ISA max of £15240 from savings acc. . IFA fee for this work, £295, plus 0.5% per annum based on the portfolio's value. Aviva's annual mgt chefs, 0.69%.

fisibs

*charges, not chefs!

dunstonh

OMW was not a bad option for small investments prior to 2013. However, with the RDR, they had to move to explicit charging and whilst they are better on larger investment on their new pricing they are not that good on smaller ones.

IFA has prepared new portfolio to an Aviva platform, to transfer the £23000 plus the ISA max of £15240 from savings acc.

That is a much better option for small investments and the advice would be easily justifiable.

BananaRepublic

fisibs wrote: »

Thanks for yr reply.
Initially invested £20,000 with Old Mutual Wealth portfolio which has eventually, after an initial drop, grown to just over £23,000 in 5 years.

Sorry but that is absolutely pathetic, I would tell the IFA where to go, they are a bunch of useless so and sos. I have had better in one year! Go to YouInvest.co.uk, and use their fund comparison tool to compare funds. I feel embarrassed that you have been given such bad advice.

fisibs wrote: »

IFA has prepared new portfolio to an Aviva platform, to transfer the £23000 plus the ISA max of £15240 from savings acc. . IFA fee for this work, £295, plus 0.5% per annum based on the portfolio's value. Aviva's annual mgt chefs, 0.69%.

I would tell them where to go, they sound like a bunch of worthless rotters. People here often recommend the Vanguard Life Strategy 100% fund, you'd do bettter to invest in that. Of course there are alternatives, but compared to the rotten advice you've had, it's good. I could recommend other funds, but the YouInvest tools are good enough.

bowlhead99

BananaRepublic wrote: »

Sorry but that is absolutely pathetic, I would tell the IFA where to go, they are a bunch of useless so and sos. I have had better in one year!

While it does not sound like a very good return at all, it is nonsense to say that it is a bad return purely because your return on high risk investments did over 15% in a year and his/hers didn't.

I am speculating of course, but presumably the IFA asked the OP - who was putting a large chunk of cash into investment funds (perhaps for the first time, given they are on the forum talking from what sounds like a position of inexperience) - how he felt about different levels of potential risk and volatility. The OP very likely said he did not want a high equities portfolio and was more about capital preservation. For example he is talking about returns on his savings, and cash ISAs.

So, while the return is poor, and the fees may have been quite high relative to the rate of return - comparing to what you got in your equities-heavy and international-heavy portfolio, is silly.

I would tell them where to go, they sound like a bunch of worthless rotters. People here often recommend the Vanguard Life Strategy 100% fund, you'd do bettter to invest in that. Of course there are alternatives, but compared to the rotten advice you've had, it's good.

Yes. They are rotters and you should take the advice from Bananarepublic and put all the proceeds into a fund that invests the existing £23k and your new money into global equities with a loss potential of 50% in any given year. That's a great idea, and not at all stupid for a cautious investor.

That advice from BananaRepublic is personalised and tailored to your goals and needs, and if it turns out to be inappropriate you can complain to the Ombudsman and get a pay out from him or his professional indemnity insurance, as he is a regulated professional and has some sort of duty of care towards you and your wellbeing.

Oh wait, no he isn't. So disregard that last paragraph, it is just sarcasm-riddled banter.

I could recommend other funds, but the YouInvest tools are good enough.

Good enough if you know what you are doing and want to screen funds simplistically, based on what returns and volatility they had in the last three years - ignoring the decade and a half before that which included two massive market crashes.

Certainly good enough if all you want to do is click on a fund name and get a pretty chart of what a nice return it made over the last five year "bull market" during global economic conditions which are unlikely to prevail over the next five years.

Beware advice from well meaning people who have a lot more money and capacity for loss than you do combined with more experience. What is fine for them is not necessarily fine for you.

FWIW, I have one of my pensions through Youinvest too and their service is absolutely fine if you want to DIY. And the above comments are not to imply that your IFA is fantastic, or great value for money. But the sad fact is that to invest only £20k it's unlikely to be worth many people's time to provide you advice if you're only willing to pay a small advice fee, because providing regulated investment advice is an expensive business.

So you are not going to get low advice fees, because they don't exist in the world of tailored personal advice. At a few hundred quid for an advised solution, the advisor is not getting rich. Unfortunately to you, with a small pot of money, it will seem quite pricy.

You could do a decent amount of research and then buy a multi-asset fund meeting your risk preferences, from a fund supermarket, on a DIY basis. Or maybe try robo-advice which is not properly tailored to your circumstances but can be reasonably low cost and can help to pick a pigeon-hole of what risk level you want to sit in.

dunstonh

Sorry but that is absolutely pathetic,

not necessarily. The investments may be say risk 2/3 on a 1-10 scale. i.e. little more than cash.

Last time someone said their return was that low and pathetic, it turned out they were taking income and drawing the yield. So, it would be nice to know more about what is held first.

fisibs

Thank you all, clearly you know far more than me! Yes I am new to this, and as a result, chose a low - to - medium risk approach with the OMW portfolio 5 years ago. Perhaps I'll 'up' the risk level with the new Aviva one and see what happens. I'm certainly not knowledgeable enough (yet) to go it alone and find my best investment option at the moment, so will go with this new portfolio through the IFA, and do much reading in the meantime. ... I intend to keep this investment going for the foreseeable future, at least until retirement age, in 16 years (currently 51, mother, and mortgage-free) but plan to learn as much as possible about the world of investments, so I can improve the returns in the future.