Choosing an IFA and fees

Bianchiintenso

Just spoken to another IFA, who wouldn't take a one off fee for advice (that's two), seems they want to manage my affairs on a monthly basis. Correct me if I'm wrong but seems to me, that they can be picky and choosy at the moment about who they work for, so basically it's an ongoing fee or we won't give advice. All of the government/banking/pension websites say seek IFA, easier said than done!

Checked how current pension is performing and unless my calculations are totally wrong? it's 9.5%, on a ride sat was talking to a mate who had a SIPPs and a lot more money than me, and he said his were performing at 2%? does this sound right with the limited information i've given you?

redux

I'd feel rather averse to ongoing or renewal commission of 1% a year, especially if they aren't necessarily doing a lot all the time

That could effectively add up to a quarter or third reduction of your fund in the rest of your life.

Over 20 years ago, on considering starting a pension scheme, I bought two or three editions of a monthly magazine for financial advisers, containing tables showing investment returns and future effect of charges in pension schemes

Reduction to half or two-thirds was in the bad end of the range. The investment trust scheme I chose would prospectively still have 93-95% after 20 or 25 years. It won't sound much like progress if some IFAs are now soaking up the annual management charges money that the worse insurers used to be infamous for.

capital0ne

Bianchiintenso wrote: »

I pretty much know what i want to do with my pension, the reason i want an IFA is to see if my pension is working as hard as possible, In my head I had an idea I would pay an agreed fee for this work rather than an ongoing commission?

You say you know what you want to do, so just do it.

An IFA will say you shouldn't go down the DIY route because it's not in their interest. Similar to a asking a brick driveway company if you should use tarmac or brick. Or asking a vegetarian if you should have turkey or ham for Xmas.
It's not hard, there is wealth of information on sites like Morningstar, Citywire, Digitalloook etc.
You probably have spent more time researching your next car/TV/Phone than your pension. Now the pension time of your life looms you'll find your mind will be able to absorb and understand the options more so than when you were in your 30's.
It worked for me, five or six years before I retired (there is no retiement age any more, you have to decide when to go for yourself) I loooked at where I was and realised I had to replace my wages with pension income. A quick spreadsheet soon gave me enough information on what to do and how my FS pension was going to work. The answer was to get promotion, and work for a couple of years longer (work wasn't that hard), and I had quite a large S&S ISA. Then factor in your SP and it all worked out fine. I did see an IFA and he was no help at all and would not answer some very simple questions when pushed of his script of a portfolio of Equities/Bonds/Property/Cash in varying proportions from low to high risk. It was all simple stuff, he wouldn't disclose his fees so I went down the DIY route.

If you're looking for confirmation from an IFA that your plans are okay forget it, they won't tell you and in reality they don't know, they just work from their own script of what they can provide through their own closed shop platform (loads of hidden fees) so beware. And good luck

Bianchiintenso

capital0ne wrote: »

You say you know what you want to do, so just do it.

An IFA will say you shouldn't go down the DIY route because it's not in their interest. Similar to a asking a brick driveway company if you should use tarmac or brick. Or asking a vegetarian if you should have turkey or ham for Xmas.
It's not hard, there is wealth of information on sites like Morningstar, Citywire, Digitalloook etc.
You probably have spent more time researching your next car/TV/Phone than your pension. Now the pension time of your life looms you'll find your mind will be able to absorb and understand the options more so than when you were in your 30's.
It worked for me, five or six years before I retired (there is no retiement age any more, you have to decide when to go for yourself) I loooked at where I was and realised I had to replace my wages with pension income. A quick spreadsheet soon gave me enough information on what to do and how my FS pension was going to work. The answer was to get promotion, and work for a couple of years longer (work wasn't that hard), and I had quite a large S&S ISA. Then factor in your SP and it all worked out fine. I did see an IFA and he was no help at all and would not answer some very simple questions when pushed of his script of a portfolio of Equities/Bonds/Property/Cash in varying proportions from low to high risk. It was all simple stuff, he wouldn't disclose his fees so I went down the DIY route.

If you're looking for confirmation from an IFA that your plans are okay forget it, they won't tell you and in reality they don't know, they just work from their own script of what they can provide through their own closed shop platform (loads of hidden fees) so beware. And good luck

You're spot on, in my naivety i really thought IFA's were there to give Independent Financial Advice and be paid for it, not try to get my money to work for them for the foreseeable future

JoeCrystal

Bianchiintenso wrote: »

You're spot on, in my naivety i really thought IFA's were there to give Independent Financial Advice and be paid for it, not try to get my money to work for them for the foreseeable future

They do exist. The one I used opened a personal pension scheme with ten investments for me for £300 seven years ago (And I was clueless about pension at the time). And reviewed it for me again at transactional basis two years ago by transferring it over to a new but much cheaper pension plan at same cost again. If I didn't do it then I would be stuck with bog standard stakeholder with very limited fund choice with no employer contribution.

AlanP_2

Bianchiintenso wrote: »

You're spot on, in my naivety i really thought IFA's were there to give Independent Financial Advice and be paid for it, not try to get my money to work for them for the foreseeable future

I was on the phone to an IFA we have been reccomended by a friend this afternoon.

4 stage process:

Initial Meeting - FREE (get to know each other session, no advice)

Planning - Full financial situation, life goals etc. and produce a plan that will (should?) get you where you want to be - CHARGEABALE at Hourly Rates (minimum £500).

Implementation - Invest through their platform - Optional and CHARGEABLE.

Ongoing Management - Assumed to go with Implementation and CHARGEABLE.


So you can find ones that will give advice without necessarily placing your investments through them, although I doubt if they have many clients who do.

capital0ne

Linton wrote: »

I call "Fake News" unless you can give a link. If the facts dont fit your case, change the facts.

Advice disaster 2
Single woman, retired, not financially sophisticated, needing to preserve her capital and draw a modest income.
Advice: Through wealth management firm St James's Place, she invested a substantial sum in funds exposing her to both currency and stock market risk.
Commission paid: More than £12,000.
Divorcee Patience Lacy-Smith came across St James's Place via a longstanding acquaintance who was an SJP partner. Patience, from Minehead in Somerset, admits she is not a financial expert. She asked the SJP representative for help and in 2006 Patience's money was invested in three SJP funds, including one invested in risky Far East shares.
Last year, as financial storm clouds gathered, Patience asked questions about her investments and then, realising the scale of her losses, complained. SJP claimed it had not given her any advice after all - but that she had chosen the investments herself on an 'execution-only' basis.
Patience, in her 60s, says: 'The statement "no advice was given or sought" can only have been true if I had known a substantial amount about the stock market, which clearly I didn't and still don't.' SJP says it has paperwork that makes clear no advice was given. When asked why substantial commission was taken although no advice given, Financial Mail was told this was 'normal practice'.
Outcome: Patience's capital has fallen 35%. The case is with the Financial Ombudsman Service.


Read more: http://www.thisismoney.co.uk/money/investing/article-1669499/The-true-cost-of-bad-financial-advice.html#ixzz51pIGqHbk
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westv

And are SJP IFAs?

bostonerimus

I'm sure there are many sincere financial advisors and of course that there are some insincere ones too. I can see how someone can benefit from good financial advice for a one time fee, but it's ongoing fees that will decimate a portfolio. 1% in fees compounding for years is a boat anchor on your return. Even the good advisors hold on to the mistaken idea that they can add value by managing a portfolio to justify their fees when many studies have shown that most will fail to beat doing basically nothing.

Bianchiintenso

Ok, so i've been in touch with Hargreaves lansdown about starting a SIPP, apparently i can set up a 'ghost' account to play with, to see how the funds i select over a period of time perform and basically to get comfortable with the HL web platform before I commit?
One thing I guess I'll have to check is are there any issues with leaving Zurich, ie loss of bonuses? or penalties for leaving?
Is there anything else I should be aware of or asking Zurich when phone them about penalties?
Any advice gratefully received