Financial Advisor's ongoing charges

maggie62

I have approximately £250000 invested in prufund growth fund series e after transferring out of my DB pension almost a year ago.

I don't intend making any withdrawals from the fund until I am 60 in just over 3 years, so am happy just to leave it untouched.

I am currently paying my financial advisor 0.75% for ongoing advice, but having met him last week he simply suggested that I leave my cash in this fund for another year and he will review it for me in a years time.

Assuming that I have to continue taking financial advice to be able to stay invested in this fund, I'd like to know how I should proceed with changing to a financial advisor who will charge a set fee rather than a percentage for his or her service.

Do I speak to Prudential or just find a suitable financial advisor and ask him to take on the work?

Thanks in advance for your help.

anselld

Are you sure you must continue taking advice? My DC fund (not Pru) allows me to cancel advice at any time.

shinytop

If you do want to continue with advice, could you at least negotiate a lower rate?

lisyloo

I don’t think your getting a good service.
I pay 0.5%.
My portfolio is in 16 funds including overseas equity (which means it doesn’t go down when the £ does) plus cash.
My advisor reviews their model portfolios quarterly (plus ad-hoc if anything extraordinary happens) and produces and full report on the global situation, asset allocation and investment funds. Sometimes they recommend switching one of two of the funds, sometimes they make changes.

I think you should find a different IFA and find out what they offer before you switch.

One fund is not optimal. I have 17 altogether split globally and split across asset classes I.e. equity, property, cash.

I can also consult my IFA on various issues for free.
For example they have advised me on old employment pensions before for free.

Albermarle

Are you sure you must continue taking advice? My DC fund (not Pru) allows me to cancel advice at any time.

Some well known personal pension providers , like Royal London, will only deal through advisors, so by default you can not cancel .

I have 17 altogether split globally and split across asset classes I.e. equity, property, cash.
I can also consult my IFA on various issues for free.

I understood that IFA's were only interested in managing investments and cash savings were not usually included in the deal ?
Good that you get free advice in other areas , I think that type of add on makes having an IFA more worthwhile , if you can find the right one of course.

dunstonh

Assuming that I have to continue taking financial advice to be able to stay invested in this fund,

You don't. Ongoing servicing is optional. However, Pru may levy charges for carrying transactions when the time is due when an intermediary is not used.

I'd like to know how I should proceed with changing to a financial advisor who will charge a set fee rather than a percentage for his or her service.

Set fees are not common. Although 0.50% is the dominant figure used by IFAs. So, getting cheaper is possible.

Do I speak to Prudential or just find a suitable financial advisor and ask him to take on the work?

Pru know very little about IFAs.

Pru is not really the sort of fund that needs ongoing advice unless there are other issues. So, maybe turn off the servicing until it is needed.

I understood that IFA's were only interested in managing investments and cash savings were not usually included in the deal ?

If the client asks, then the client usually gets. We do all sorts of non-core things for clients. Most IFA firms do. Some even do weird things depending on where they stand in the community.

lisyloo

Albermarle wrote: »

I understood that IFA's were only interested in managing investments and cash savings were not usually included in the deal ?

This is cash within a SIPP.
I must admit I don't understand why it's there as part of the model portfolios.
Perhaps it's there so that you can buy without selling??
It's something I intend to ask at my next annual review but all their model portfolios have a small cash % and my employer (HL) SIPP also recommends a small cash % so seems to be standard.

Happy to be educated on why this is the case.

Whilst I wouldn't expect an IFA to advise specifically on cash saving products, I would expect them to take a somewhat hollistic approach at annual reviews.
Everyone is going to need a certain certain cash balance i.e emergency fund.
The annual review is partly a scouting for new business opportunities for them but a good IFA will realise that good long term business is going to come from providing a good all round service, some parts of which won't necessarily be highly profitable but will create a positive relationship. So if for example if takes them 5 mins to tell you that your emergency fund is a little small then that is an example of what a good IFA would do. The result of this good relationship is that should I wish to do something major (like purchase an annuity) then the first person I'll turn to is my trusted IFA.

wjr4

lisyloo wrote: »

This is cash within a SIPP.
I must admit I don't understand why it's there as part of the model portfolios.
Perhaps it's there so that you can buy without selling??
It's something I intend to ask at my next annual review but all their model portfolios have a small cash % and my employer (HL) SIPP also recommends a small cash % so seems to be standard.

Happy to be educated on why this is the case.

It's usually there to pay charges.

dunstonh

This is cash within a SIPP.
I must admit I don't understand why it's there as part of the model portfolios.
Perhaps it's there so that you can buy without selling??

Generally, you hold around 2% in cash as a float. Dividends get paid to it and you rebalance it back into the various investments periodically.

Some allocations may have a cash amount at the moment (at the low risk end of the scale) to keep the volatility level. Usually, you do not get much allocated to cash but when markets appear overvalued compared to historical levels then you often find weightings towards cash are introduced and/or creep up a bit.

maggie62

Thanks all for your replies, they're much appreciated.

bostonerimus

I think the thing to do now is to reduce costs as much as possible and to understand exactly what is happening to your money and how you can access it. From a previous thread the money might be wrapped in an insurance policy....or it might not. I'd find out the Pru's fees and the IFA fees and see where you can save.

This is a good example why the financial industry was so keen to see pension reforms. The employers were anxious to off load the risk and bother and the financial services industry was anxious to access large pots of money that they could charge fees on for doing little work.