We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
IFA Advice
Options
Chudders
Posts: 26 Forumite
Hi,
I was wondering if anyone would be able to help with what is, I know, a pretty naive question!
Basically what I am wondering, is what do you get from an IFA? I understand that you pay an IFA a fee, be that a fixed hourly fee for advice or a percentage of the amount you are going to invest, but what I'm unsure of, not having any experience of this, is what you get for your money. Is the advice, for example, "I think you should invest £xxx in an investment ISA. That'll be £1500 please, have a nice life" or do they actually suggest which specific funds they recommend within that ISA, set it up for you, and mange its performance thereafter?
The situation we are in, is that we have an amount of money available to invest, which has come from my in laws, as part of their wealth management/estate planning.
They have used SJP for the past 10 years or so I believe, and although they are aware they are expensive (although I don't believe they realise quite how expensive), they are very happy with the service, advice and return they have seen on their investments. I, on the other hand, having spent a bit of time researching this company, am of the mindset that although they are very happy with the return they have made, they have made no comparisons to alternative providers or benchmarks and they probably (likely) could have achieved even better results elsewhere.
Like I said though, they are very happy with the advice and help they have received in getting their affairs in order.
Which brings us to now. As the money we have received has/will come from the in laws, we have basically fallen into bed with SJP ourselves. They have advised us on investment isas, and given us a discount on the initial fee due to the long standing relationship with the family, so that the initial charge will be 2%. The ongoing charges, I am struggling to understand from the paperwork, but it states that the average annual charge totals 1.92% (although on another sheet it states that the adjustment on growth will be reduced by a total of 2.6% after fees, so I'm not completely sure).
We have done some research, and aside from the negative press, and general consensus that their fees are high, the other thing that concerns us greatly is that I found an 'independent' report on the performance of SJP funds (not sure exactly how independent it is!) by ukmoneysite and 5 of the 7 (all SJP own managed) funds they have selected for the Isa performed badly vs benchmark/sector average in the 5yrs to 2017. This obviously worries us.
All of this said, we are absolutely not confident/knowledgeable enough to DIY. We do want the hand holding that someone like SJP provides, and are happy to pay a premium for that, which brings me back to my original question of can we expect the same kind of service from an ifa but with potentially better performing funds and lower fees, or is it a case of better the devil you know to know we'll be looked after based on the family relationship?
So sorry about the long post but thought best to give full scenario.
Thanks in advance!
I was wondering if anyone would be able to help with what is, I know, a pretty naive question!
Basically what I am wondering, is what do you get from an IFA? I understand that you pay an IFA a fee, be that a fixed hourly fee for advice or a percentage of the amount you are going to invest, but what I'm unsure of, not having any experience of this, is what you get for your money. Is the advice, for example, "I think you should invest £xxx in an investment ISA. That'll be £1500 please, have a nice life" or do they actually suggest which specific funds they recommend within that ISA, set it up for you, and mange its performance thereafter?
The situation we are in, is that we have an amount of money available to invest, which has come from my in laws, as part of their wealth management/estate planning.
They have used SJP for the past 10 years or so I believe, and although they are aware they are expensive (although I don't believe they realise quite how expensive), they are very happy with the service, advice and return they have seen on their investments. I, on the other hand, having spent a bit of time researching this company, am of the mindset that although they are very happy with the return they have made, they have made no comparisons to alternative providers or benchmarks and they probably (likely) could have achieved even better results elsewhere.
Like I said though, they are very happy with the advice and help they have received in getting their affairs in order.
Which brings us to now. As the money we have received has/will come from the in laws, we have basically fallen into bed with SJP ourselves. They have advised us on investment isas, and given us a discount on the initial fee due to the long standing relationship with the family, so that the initial charge will be 2%. The ongoing charges, I am struggling to understand from the paperwork, but it states that the average annual charge totals 1.92% (although on another sheet it states that the adjustment on growth will be reduced by a total of 2.6% after fees, so I'm not completely sure).
We have done some research, and aside from the negative press, and general consensus that their fees are high, the other thing that concerns us greatly is that I found an 'independent' report on the performance of SJP funds (not sure exactly how independent it is!) by ukmoneysite and 5 of the 7 (all SJP own managed) funds they have selected for the Isa performed badly vs benchmark/sector average in the 5yrs to 2017. This obviously worries us.
All of this said, we are absolutely not confident/knowledgeable enough to DIY. We do want the hand holding that someone like SJP provides, and are happy to pay a premium for that, which brings me back to my original question of can we expect the same kind of service from an ifa but with potentially better performing funds and lower fees, or is it a case of better the devil you know to know we'll be looked after based on the family relationship?
So sorry about the long post but thought best to give full scenario.
Thanks in advance!
0
Comments
-
Is the advice, for example, "I think you should invest £xxx in an investment ISA. That'll be £1500 please, have a nice life" or do they actually suggest which specific funds they recommend within that ISA, set it up for you, and mange its performance thereafter?
The IFA will recommend the tax wrappers, the provider/platforms to use and the investments within them and put them all in place.
If you then choose to have their ongoing service, they will provide ongoing advice (such as annual bed & ISA and rebalancing and adjustments, top ups etc).They have used SJP for the past 10 years or so I believe, and although they are aware they are expensive (although I don't believe they realise quite how expensive), they are very happy with the service, advice and return they have seen on their investments.
SJP is very slick. An IFA will print things from their office printer. SJP will have glossy booklets and those will look better visually as a laser printer cant match the print quality. However, for context of cost, we quoted £2000 initial for a £500,000 portfolio build. SJP was £25,000. That makes the glossy paper very expensive. SJP are also expensive annually. They were nearly double against our costing.
#I, on the other hand, having spent a bit of time researching this company, am of the mindset that although they are very happy with the return they have made, they have made no comparisons to alternative providers or benchmarks and they probably (likely) could have achieved even better results elsewhere.
That is exactly the thing. If you dont compare like for like then you are not in the position to say whether it has done well or not. Maybe with MiFIDII requiring SJP to give them the annual costs in monetary terms, they may take a second look.They have advised us on investment isas, and given us a discount on the initial fee due to the long standing relationship with the family, so that the initial charge will be 2%.
You shouldn't be getting any initial charge realistically if the investments are already in situ in the estate. A stock transfer should take care of that.
SJP are well known for their smoke and mirror charges. They get away with not being unbundled as they sell their own product.The ongoing charges, I am struggling to understand from the paperwork, but it states that the average annual charge totals 1.92% (although on another sheet it states that the adjustment on growth will be reduced by a total of 2.6% after fees, so I'm not completely sure).We do want the hand holding that someone like SJP provides, and are happy to pay a premium for that, which brings me back to my original question of can we expect the same kind of service from an ifa but with potentially better performing funds and lower fees, or is it a case of better the devil you know to know we'll be looked after based on the family relationship?
An IFA and an FA can do the same things. However, the IFA is whole of market and the FA can only do their own product. Plus, the employer may put further restrictions on the FA that an IFA is not required to have (or is not allowed to have as any restriction means you cannot call yourself an IFA).
The two options in investing should be either to DIY or use an IFA. Use of an FA should not be in your consideration.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.0 -
Thank you for your helpful reply. You have confirmed essentially what I suspected.
Do the fees I've mentioned still seem excessive even accounting for the initial discount to 2%? (putting aside the concern regarding performance of the funds for a moment). From the reading I've done, it would appear that if we want a like for like hand holding experience that we'd get with sjp, we would be looking at paying an IFA a say, 1% fee plus a platform and fund charge on an annual basis, is that likely to average out at significantly more than the 1.92 (or 2.6, still unsure which is the actual figure!) % we've been quoted by sjp?
I feel I should give a little more back ground info, to explain the next part of our concern....
The initial amount we have to invest is £48k, this would be split between 2 isas and 2 jisas to maximise the allowances. This amount has been given to us by mother in law from cash isas and current account she holds on the advice of sjp, in the hope that she survives 7yrs. Its not come from within funds held by sjp so is subject to the 2% initial charge.
Father in law died 2yrs ago. He held a pension with sjp which is worth approx 130k. This is yet to be transferred. But must be transferred ASAP. Father in laws Will passed all to mother in law. However, on the advice of sjp, they advised that as mil is 70yrs, in relatively poor health, with a large estate herself, and husband is an only child, that the sensible option would be to pay out the pension directly to son. Apparently for this to happen mother in law has to write a letter to the pension trustees (sjp!) and state that this is what she wishes to happen. They will then decide if they agree.
Just to add here, we are not desperate for this pension money, we would long term invest it ourselves, it just seems to make more sense for it to pass directly to us now, as if it transfer to mil, it will obviously be ours in the long run, but with a big chunk missing due to iht.
Also, the other point to make here is that mil estate is circa £1m and will pass solely in the majority to husband, and unfortunately that is likely to be within the next decade at best.
What we are concerned about, in addition to everything I have mentioned in my original post, is that sjp have given all this advice, presumably based on the assumption that husband will become their client. If we jump ship, is it likely that they will change their advice to mother in law/cause any problems about passing the pension to us now, as obviously as they are the trustees, it's their decision, regardless of what mil says!
I hope I've made sense!0 -
Hi,
I was wondering if anyone would be able to help with what is, I know, a pretty naive question!
Basically what I am wondering, is what do you get from an IFA? I understand that you pay an IFA a fee, be that a fixed hourly fee for advice or a percentage of the amount you are going to invest, but what I'm unsure of, not having any experience of this, is what you get for your money. Is the advice, for example, "I think you should invest £xxx in an investment ISA. That'll be £1500 please, have a nice life" or do they actually suggest which specific funds they recommend within that ISA, set it up for you, and mange its performance thereafter?
You would normally expect that the advice would be to invest in particular funds and they would offer ongoing management of that.
Every time I hear that company mentioned an alarm bell goes off in my head.They have used SJP for the past 10 years or so I believe, and although they are aware they are expensive (although I don't believe they realise quite how expensive), they are very happy with the service, advice and return they have seen on their investments. I, on the other hand, having spent a bit of time researching this company, am of the mindset that although they are very happy with the return they have made, they have made no comparisons to alternative providers or benchmarks and they probably (likely) could have achieved even better results elsewhere.
Probably, yes. That is their affair, however. Suggesting they look around might not hurt.
SJP are not IFAs; they are FAs. If they have told you that they are IFAs then they have lied.Which brings us to now.As the money we have received has/will come from the in laws, we have basically fallen into bed with SJP ourselves.
Just because your in-laws use them does not mean that you have to! You are perfectly entitled to find your own (genuine) IFA.They have advised us on investment isas, and given us a discount on the initial fee due to the long standing relationship with the family, so that the initial charge will be 2%.
Big deal! 2% is at the higher end of fees for initial advice.The ongoing charges, I am struggling to understand from the paperwork, but it states that the average annual charge totals 1.92% (although on another sheet it states that the adjustment on growth will be reduced by a total of 2.6% after fees, so I'm not completely sure).
If you are struggling to understand the fees then the FA has not done their job properly. You should know exactly what it will cost. It is their responsibility to ensure that you understand their advice.
1.92% as an ongoing charge also sounds high to me.We have done some research, and aside from the negative press, and general consensus that their fees are high, the other thing that concerns us greatly is that I found an 'independent' report on the performance of SJP funds (not sure exactly how independent it is!) by ukmoneysite and 5 of the 7 (all SJP own managed) funds they have selected for the Isa performed badly vs benchmark/sector average in the 5yrs to 2017. This obviously worries us.
Do you mean negative press like this? https://www.which.co.uk/news/2017/07/exclusive-wealth-manager-st-jamess-place-misleading-customers-on-charges/
You could almost certainly do better in terms of fund selection with a genuinely independent financial adviser.All of this said, we are absolutely not confident/knowledgeable enough to DIY. We do want the hand holding that someone like SJP provides, and are happy to pay a premium for that, which brings me back to my original question of can we expect the same kind of service from an ifa but with potentially better performing funds and lower fees, or is it a case of better the devil you know to know we'll be looked after based on the family relationship?
If you are not confident about DIY-ing then don't. Anyone who recommended that to you would be doing you a disservice.
Yes, you would be better off talking to an IFA.0 -
Ouch
Do they still levy a tiered exit charge starting at 6% if you leave them within 6 years?
I believe so, yes on pensions at least. The sjp salesman advised me when I specifically asked, that there are no exit fees with an investment isa as they charge an initial fee. As it stands anyway, we only signed the paperwork yesterday, so are well within the cooling off period, and have not transfered them any money.0 -
-
I believe so, yes on pensions at least. The sjp salesman advised me when I specifically asked, that there are no exit fees with an investment isa as they charge an initial fee. As it stands anyway, we only signed the paperwork yesterday, so are well within the cooling off period, and have not transfered them any money.
I would take swift advantage of that cooling off period.0 -
Do the fees I've mentioned still seem excessive even accounting for the initial discount to 2%?
Percentage fees need to be viewed in context. i.e. the monetary amount.
2% of £50,000 is £1000. That's fair enough. 2% of £500,000 is £10,000. That is disgracefully high.
The best pricing models see the percentages getting tapered down or the increasingly popular cap and collar model (i.e. percentage but subject to minimum and maximum).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.0 -
Percentage fees need to be viewed in context. i.e. the monetary amount.
2% of £50,000 is £1000. That's fair enough. 2% of £500,000 is £10,000. That is disgracefully high.
The best pricing models see the percentages getting tapered down or the increasingly popular cap and collar model (i.e. percentage but subject to minimum and maximum).
Thanks, I understand.
I guess on our initial investment of £48k, the 2% initial, and 1.92/2.6% annually isn't really much to cry about against what a similar product might cost elsewhere - putting aside the major issue of the underperforming funds!
I'm really thinking about the bigger picture, that if we do go with them once we get dad's pension transfered we'll be talking about £180k portfolio, and then rising significantly at some point thereafter when the inevitable happens.
I really am struggling to understand why sjp are as big as they are?! I spent 30 minutes on Google and literally struggled to find anything good said about them! It would seem their fees are among the highest, and their funds perform among the worst, so why are they so huge? Surely it can't all be down to slick salesmen and people that don't know any better?!0 -
I really am struggling to understand why sjp are as big as they are?! I spent 30 minutes on Google and literally struggled to find anything good said about them! It would seem their fees are among the highest, and their funds perform among the worst, so why are they so huge? Surely it can't all be down to slick salesmen and people that don't know any better?!
I think it can. Most people are completely financially ignorant and are also very credulous. The combination of the two results in a perfect storm for the SJPs of this world.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 351K Banking & Borrowing
- 253.1K Reduce Debt & Boost Income
- 453.6K Spending & Discounts
- 244K Work, Benefits & Business
- 598.9K Mortgages, Homes & Bills
- 176.9K Life & Family
- 257.3K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards