Cost of investment advice

nuriel

Hi people, I have met an adviser from St. James's Place (let me know if the company name should not be mentioned here, I ll remove it) and he came up with a plan for my retirement and ISA. The guy looks trustworthy and the company seems to have a good reputation, but before I make a move, I need to clarify few things still confusing me, even after talking to him:

For the ISA, there is a 5% initial charge, then an average of 1.67% charges for the annual management charges per year (which include his advisory fees).
- Is the initial charge taken out each month, ie I would be paying £5 per month if I spare £100 for the ISA ?

- Is the annual management charge taken on the entire value of the portfolio or only on the amount invested ?

- Are the charges above sensible ? To be fair, I researched it a bit and the opinions I gathered suggested this company is not cheap but I have no facts to compare.

For the pension, no upfront charges, annual management charges + external fund charges should average out to 1.9% according to him (and his advisory fees are included). There is a 6 years breaking close which means there is a 6% charge if I withdraw the money within the first 6 years, 5% within 5 years etc...

- Same again, are these terms values way above the average I could find elsewhere ? I think I am trying to estimate how much more expensive the service is.

- Most importantly, if you have experience with this company, are they worth it ? (I'll remove this question if the name of the company cannot be mentioned). They might be a little bit pricier as I gathered but could be the solution for people like me who have little time / knowledge for investing. N

PeacefulWaters

The charges are obscenely high.

Eco_Miser

nuriel wrote: »

let me know if the company name should not be mentioned here

Only in the sense that Lord Voldemort's name should not be mentioned in Hogwarts. Mentioning company names is allowed and encouraged. It makes finding the bad ones so much easier.
SJP is a legitimate company that do what they say they'll do, but charge enormous fees for the privilege.

Search this forum for mentions of the company, and you'll find plenty of opinion on the excessively expensive charges.

ColdIron

Nothing wrong with SJP funds but you'd need to work hard to find a more expensive option. Heinz Baked Beans at Harrods prices. Are you aware of the rather punitive tiered exit fees they can levy if you leave within 6 years?

ams25

Google "st james place charges"
Should give you plenty to go on.

xylophone

You are now in your mid thirties?

What pension provision do you have?

You are currently contributing to a company pension? DB or DC?

Are you a higher rate tax payer?

You have saved an emergency fund?

How much money are you proposing to invest?

nuriel

PeacefulWaters wrote: »

The charges are obscenely high.

ColdIron wrote: »

Are you aware of the rather punitive tiered exit fees they can levy if you leave within 6 years?

ams25 wrote: »

Google "st james place charges"
Should give you plenty to go on.

Thanks guys for taking time to help. Yes, the adviser has been quite transparent on the charges. And my initial - although shallow - research lead me to believe the service would be expensive. But what I am after is a view of what fairly common charges are. For instance, ColdIron mentioned the "punitive tiered exit fees, which are 6% in my case within the first 6 years, would you be happy with 4% ? Are management annual charges of 1% average ? I wish there was a table presenting charges per company so that they could be compared.

Then again, there is the advise part of the service, which might explain SJP charges, which you guys might not need as you maybe already have the knowledge to do your own research.

bostonerimus

I'm gobsmacked by fees like that, they are obscenely high.....run a mile! You simply don't have to pay charges like that. If you DIY you'll only be paying fund fees and platform charges and with careful selection you can push those down pretty low. The level of research you need to do to come up with a sensible plan probably won't take long and ongoing management of your funds should take a couple of hours a month.

nuriel

xylophone wrote: »

You are now in your mid thirties?

Yes. And thx for your time as well.

xylophone wrote: »

What pension provision do you have?

What s a pension provision ? If this is the cumulated amount I have accrued so far, that s around £35K. During our discussion, he made me realise I should aim at way higher if I wanted to have the decent level of income by the time I retire, so I am planning to boost this amount with some disposable cash.

xylophone wrote: »

You are currently contributing to a company pension? DB or DC?

Yes, DB I think (my employer and I pay in, I can contribute more if I wish to, and I am planning to once I figure out how)

xylophone wrote: »

Are you a higher rate tax payer?

Yes

xylophone wrote: »

You have saved an emergency fund?

Yes, one year worth of fixed bills and few non-critical extra

xylophone wrote: »

How much money are you proposing to invest?

I am planning £500 per month and and initial boost of £40K

Thx

dunstonh

SJP are one of the most expensive distribution channels in the UK. A lot in the industry also consider their charging method to be non-compliant with the RDR. However, they get away with it because they only sell their own product.

SJP is slick. However, you are paying for that. IFAs love coming across SJP clients as they can wipe the floor with them when it comes to charges. Indeed, SJP have the record cost saving for me as an adviser when I moved someone out of SJP. Over £300k saved in charges over the term.

Audaxer

I think you'd be better either looking for an Independent Financial Adviser or investing the funds yourself through an investment platform, usually referred to as DIY investing.

I would suggest you do a bit of reading on this forum and other investment sites like Monevator to learn a bit about DIY investing. A lot of people would suggest that with £40k to invest you are better going DIY, but it depends if you feel comfortable going down that route after doing a bit of research. Maybe you should speak to a couple of IFAs (I understand they offer a free initial consultation) to get an idea of their charges and what they will provide for the costs.