I.F.A fees

deltadog

Hi I would like some advice on IFA fees please I/we are retired , I have a private drawdown pension via LV/Rathbones value £124k,& a managed portfolio with Investec of £143k .Both of these arranged by my IFA ,& for which he received a fee for setting up & draws an annual fee of .48% of our total investments , & there are management fees also from Investec ,LV ,& Rathbones .My question is as follows . during an annual meeting with us to check over our investments the question arose of any other assets. We told him we have a further approx. £120k from savings & an inheritance, to which he suggested £60k be placed with Investec portfolio which will be put into an ISA wrapper. we received the paperwork the next day ,for this he will charge a 1% fee. as he has already had a fee for setting up the portfolio & receives an annual fee from us do you think this is correct Or am I just tight???:D
Thanks Old chap

tacpot12

Do you need his investment advice to add to the Investec portfolio, or would you be happy to distribute the extra cash between the existing investments (bearing in mind that this approach might incur extra dealing costs)?

If you want their investment advice, then £600 is probably money well spent.

MK62

If you feel your IFA does things for you which you can't do yourself, or aren't confident enough to do yourself, then you really have little choice (other than to try to find a cheaper IFA, but the charges would appear to be in the ballpark).
Also, your Investec account might be IFA only and you may not be able to deal directly anyway, so that might sort that (some companies will allow you to deal directly with them, but you may pay higher charges, partially offsetting any gain you might get from going DIY - I have no idea if yours is like that though, you'd have to check)

It would be interesting to know how he is going to get 60k into an ISA wrapper though, with the annual limit being 20k each (is the "we" actually 3 people?), unless Investec will sort this out over two tax years.

bigadaj

There's always opportunity for negotiation.


If I were you then I'd be asking him to waive his initial fee, he's still getting his on going fee on this and the other sums, so he's making £1500-£1600 per year out of you which isn't a small sum.


To be fair to him then 1% is pretty low as an initial fee, particularly on a relatively small sum, but he's already servicing you and will have done risk profiling so the work for him to place this additional sum is minimal; if you don't ask you don't get.


I'd want to know the charges on the funds as well if I were you, those may well be higher than the fee he's charging you, and I'd expect his annual review to be partly a review of current investments and whether they are still applicable, for which one element is charges.

BJL55

There are 4 types of ISA: You can put money into one of each kind of ISA each tax year.
1: cash ISAs
2: stocks and shares ISAs
3: innovative finance ISAs
4: Lifetime ISAs


[STRIKE]Can you not put £20K each in to 1, 2 & 3 (60K total) and 4 (80K total) if your a first time house buyer?[/STRIKE]


Should have read page 2 :embarasse

ColdIron

BJL55 wrote: »

Can you not put £20K each in to 1, 2 & 3 (60K total) and 4 (80K total) if your a first time house buyer?

Each individual can put £20,000 per financial year into ISAs, how you divvy it up is irrelevant. A pair could put 2 x £20,000 in 2018/19 and again in 2019/20

ManMadeWays

0.48% on circa £260k is a good deal. I pay 0.6% on > £1m, reduced from a standard 1% due to value. I think I'll ask for a reduction in a year or so

fred246

0.6% on £1million = £6000. So if he charges £150 per hour it means he spends a whole week every year looking at your portfolio. How many sides of A4 would your portfolio be?

dunstonh

Many advisers will not charge on top ups if you have a certain amount of money under investment with them already. Some do. This is just like area of retail services. Some firms charge £x, some charge £y. Some will be good value. Some will be expensive.

You could find more expensive ones easily. You could find cheaper. However, with the amount you already have invested, you are not a big client for many IFAs. Indeed, I had someone come to us last year as their existing adviser said their fund of £250k was too low for them to deal with. So, if your adviser is with a firm that routinely deals with £1m clients, then their pricing will be focused on that type of person. For some advisers, you will be small fry. For others, you would be a valued client.

deltadog

thanks for all replies Our portfolio with Investec is in both names hence £20k each into an isa wrapper & £20k ready for next year We put in an original sum derived from ISA's already held £123k. Investec manage our investment buying & selling as required with all buy /sell charges incorporated in their annual fee this fund is now valued @£143k & the LV/Rathbones fund is £124k so my IFA 's annual fee is O.48% of £267K my question is purely is it right for him to charge another 1% on the top up of £60k placed with Investec as he has already received a set up fee back in 2012

dunstonh

my question is purely is it right for him to charge another 1% on the top up of £60k placed with Investec as he has already received a set up fee back in 2012

Yes it is.

As of 3rd January 2018, a new EU directive came in called MIFID II. The relevance in this scenario is that prior to that date, top ups and adjustments did not require the full range of requirements and documentation that new investments did. However, from 3rd January, top ups are now treated the same as if it is new money. So, the adviser has to do the full work. Generally, people work to be paid and don't work for free. Hence why there is a fee.