Investment advice for a newbie

dunstonh

My parents used a St. James's place adviser and he was cheaper than two IFA's they sat down with. They have flexibility on what they charge, they paid a 2.0% initial fee, and a total ongoing fee of 1.2%. This include the adviser 0.5% (ifa's wanted between 0.6% and 1%) fund fees. So all in of 1.2% seemed reasonable to me.

We were up against an SJP rep recently. Our initial charge was £2500. SJP was £25,000.

The ongoing charge of SJP is not flexible. The SJP rep quoted AMCs versus us quoting OCFs plus transaction costs. Our ongoing was higher than SJP because of the different disclosure level. it was very hard to explain that to the client as the parents and much of the family used SJP and we were the outsiders effectively.

They had been "sold" very well by the SJP sales rep but disclosure was awful.

My gut (as I never saw the SJP advice but based on comments) is that SJP were trying to get it into an investment bond and write a bogus trust (bogus as in not actually needing the trust but using it as an excuse to do an investment bond). Whereas we were looking at ISA, pension and GIA with annual CGT allowance use and bed & ISA/bed & pension. They said the SJP rep told them they didnt have to worry about CGT (again, making me think it is was a bond).

Once the SJP rep found out our initial charge, he lowered his to match ours.

but the other two IFA's both were recommending the Pru Cautious fund, whereas my parents have a portfolio with more than one provider running it.

Interesting. That is a niche fund for people who are very cautious. It historically delivers year in year out but it really is for the very cautious. To find two IFAs recommending that indicates their belief your parents are very cautious. Over the last decade, there has only been one unit price reduction and very straight line growth. SJP doesn't have a similar investment in their range.