IFA Ongoing Charges

ian16527

I've just had an IFA move some of my DC pensions into one pot, around 60K in value with fees of 1.8K for doing this (3%)
They have also signed me up for ongoing review service at 0.75% but the minimum fee for an annual review of suitability is £750 which is a little more than they are getting from my 60K pot.

Therefore I am actually wondering if this is value for money and worth keeping up?

JoeCrystal

That sound quite expensive to be honest (1.8k fees!). No point in having an ongoing service at a relatively small pot. Are there any particular reason why you didn't do the transfers yourself, with the DC pension schemes, it sounds relatively straightforward.

dunstonh

I've just had an IFA move some of my DC pensions into one pot, around 60K in value with fees of 1.8K for doing this (3%)

You could have got cheaper but you could have paid more. Your pension is not very big. So, you are not really at the stage you would expect to benefit from discounts.

They have also signed me up for ongoing review service at 0.75% but the minimum fee for an annual review of suitability is £750 which is a little more than they are getting from my 60K pot.

Therefore I am actually wondering if this is value for money and worth keeping up?

For a small fund value, 0.75% is not bad. Again, the size of the fund is the issue here. Whilst 0.50% is the dominant figure, you do frequently see 1.0% on sub £100k values. So, in that respect, 0.75% is fine.

You can refuse ongoing servicing and you can turn it off. However, the adviser firm will usually use different investments for non-servicing clients and that could impact on the returns. Our servicing portfolio outperforms the transactional multi-asset funds we would use. No IFA can guarantee that is the case but ongoing servicing usually pays for things like rebalancing, reviews, fund changes, tops etc.

It is very much a personal choice what you want and need.

[Deleted User]

Or you could read a couple of good books, write your own investment policy and do your own reviews. All for the price of 2 books. And here is the kicker: whether you use IFA or not, you and you alone carry responsibility for portfolio success. And the consequences of failure.

fred246

This is pretty standard for this forum. Someone is ripped off by an IFA and asks if they have paid too much. An IFA appears and says it's good value. It's so pointless. What else would they say.

HappyHarry

You'll have to excuse fred246, he's our resident troll. Doesn't like IFAs and garages.

fred246

They're such bullies. We have invested your pension well. Oh you don't want servicing? Oh we will have to reinvest it in poorly performing funds then. Ditch the IFA. They are parasites. I transferred my own pension. It took less than 10 minutes to fill the form in.

Seabee42

As has been said above do you know enough to do it yourself? If not you can clearly see what you are paying for. If you do not want to spend the time picking up even enough investment basics to do it yourself the fees are not that bad.


Even if they can recommend better funds if your advised the .75% annual fee is quite an investment drag they have to beat for you to stand still all other charges being equal.

[Deleted User]

I must admit, saying to someone who has just paid you thousands of pounds “I will put your money in poor funds unless you keep paying thounds every year” does sound like extortion.

bostonerimus

Fees matter and anyone giving away 0.75% for an "annual review" is going to see portfolio returns substantially dented.

Linton

Deleted_User wrote: »

I must admit, saying to someone who has just paid you thousands of pounds “I will put your money in poor funds unless you keep paying thounds every year” does sound like extortion.

Who said that? The investing universe isnt made up of "good funds" and "poor funds". A far more useful division is "appropriate funds" and "inappropriate funds", the categorisation depending on the objectives and situation.



A professional may base their choice of funds on a technical analysis using data, tools and techniques that are not readily available to the private inexperienced investor. There is no way it would be appropriate simply to hand over this sort of portfolio to the inexperienced investor and say "its yours, you run with it". It would be far more useful to recommend a simple multi-asset fund solution of the right risk/return which can be easily managed with little knowledge.


For a £60K pension portfolio which would provide an income of perhaps £2K/year the single multi-asset fund solution seems to me to be exactly the right solution for the OP. Paying an IFA to manage a bespoke portfolio of that size must surely be difficult to justify economically for either party.