IFA Charges

Chooser

Looking for a bit of advice, 18 months ago I transferred my cash isa, value £55K to an IFA, who invested it in Tatton Managed Balanced. Since that time the value had dropped by £1,200, however I see that the advisor, in addition to the initial advisor charge of £1,660 has been getting a steady £35/month. Other charges of about £18/month have also been taken by Aviva and Tatton Management. I knew there would be an ongoing charge but suppose I imagined the advisor would actually be doing something, ie if the fund wasn't doing well he would transfer some money elsewhere, all very vague, I do not have a good head for finance. I know many contributors here are very keen on Vanguard, is there any good reason why I shouldn't just transfer my isa to a suitable, safish, fund with them? I'm starting to resent the present setup, have looked at their site and the charges seem much less. I should not need access to the money but want to keep it safe, I have cash on deposit for any needs.

dunstonh

but suppose I imagined the advisor would actually be doing something,

You shouldnt have to imagine it. What the ongoing service provides should be agreed at the outside.

ie if the fund wasn't doing well he would transfer some money elsewhere

What makes you think that its not doing well?

LHW99

Have you asked the advisor to talk things through with you?
I don't know the fund, but some funds have increased in value since late 2017, others decreased, its what they do.
You don't have to have the ongoing servicing if you don't want, now its been set up; the advisor probably does an annual review, but charges monthly for it. You could just pay for "transactional advice" going forward, say every 3 or 5 years.
For an investment ISA, you would need to judge it over 5-10 years anyway, not 18 months.

dunstonh

Tatton is a DFM (they have also been buying IFA firms who then become FAs rather than IFAs). So, changes are made on a discretionary basis (without asking the investor) and not on an advisory basis (which requires the adviser to get permission from the investor). Advisory tends to more visual on changes whereas discretionary tends to be more behind the scenes.

Aviva have only just sent out the MIFID II cost disclosures and statements dated to the end of Dec 2018. As Q4 2018 was a loss period that made 2018 a loss year, they do not include the growth period of Q1 2019 which mostly recovered those losses. The OP doesnt say if it from the statement of a more recent valuation.

Ceme3000

Chooser wrote: »

I know many contributors here are very keen on Vanguard, is there any good reason why I shouldn't just transfer my isa to a suitable, safish, fund with them? I'm starting to resent the present setup, have looked at their site and the charges seem much less. I should not need access to the money but want to keep it safe, I have cash on deposit for any needs.

I'm no expert either, but if it were me I would resent the ongoing charges too (although I appreciate that IFA's have overheads and need to make a living) and I would also consider a Vanguard 'set up and forget fund'. Even a safe (ish) fund could lose money though, which you must be prepared for.

Chooser

Thanks for replies, dunstonh I think it's not doing well because I have less money than I put in, I do understand that values go up and down but so far the IFA is the only one getting anything (£2.5k in fact). I also understand that it should all be measured over 5 years not 18 months, however I took out a little account with the nutmeg deal featured on MSE a couple of months ago, robo something, that is currently showing at +3.5% over the short period. And the Tatton valuation is via the Aviva portal so current, as of yesterday. I have contacted the IFA who said he'd ring me today but hasn't done so. Don't suppose anyone would like to help me choose my vanguard fund out of the 72 listed?/

Prism

Chooser wrote: »

Thanks for replies, dunstonh I think it's not doing well because I have less money than I put in, I do understand that values go up and down but so far the IFA is the only one getting anything (£2.5k in fact). I also understand that it should all be measured over 5 years not 18 months, however I took out a little account with the nutmeg deal featured on MSE a couple of months ago, robo something, that is currently showing at +3.5% over the short period. And the Tatton valuation is via the Aviva portal so current, as of yesterday. I have contacted the IFA who said he'd ring me today but hasn't done so. Don't suppose anyone would like to help me choose my vanguard fund out of the 72 listed?/

The last couple of years are been difficult and most funds, including the Vanguard ones, have made either a small loss or small gain. To do a fair comparision you need the exact investment dates as it can make a large difference. Your current monthly rate for Aviva and Tatton looks fine. I am not sure what the ongoing advisor fee is really doing for you though.

dunstonh

I think it's not doing well because I have less money than I put in

You had an initial charge and 2018 was a loss year.

I do understand that values go up and down but so far the IFA is the only one getting anything (£2.5k in fact).

You were unfortunate in getting a negative year so early on but as you say you undertand that, then you knew that was always a possibility.

I also understand that it should all be measured over 5 years not 18 months,

An economic cycle is around 10 years. You should not rely on 5 years as you dont know if you are going to get the good 5 years or the bad 5 years.

however I took out a little account with the nutmeg deal featured on MSE a couple of months ago, robo something, that is currently showing at +3.5% over the short period.

The exact same period (in respect of dates)? Nutmeg investments are nothing special and you would expect broadly similar volatility across the risk levels.

I would question the adviser as they cannot take a fee for doing nothing. It has to be for services provided. They are using a DFM rather than controlling the investment selection themselves. In this scenario, there is very little left for the IFA unless taxation issues, planning and tax wrappers etc come into play. If none of those apply then you may as well end on the ongoing servicing.

Reluctantpensioner

I think you might have misunderstood one aspect of the offering you have. "Tatton Managed Balanced" isn't a fund, it's a managed portfolio.
If they are doing their job then the answer to your question "I imagined the advisor would actually be doing something" is - yes but it it is being done in the portfolio asset allocation, behind the scenes.

MK62

Reluctantpensioner wrote: »

I think you might have misunderstood one aspect of the offering you have. "Tatton Managed Balanced" isn't a fund, it's a managed portfolio.
If they are doing their job then the answer to your question "I imagined the advisor would actually be doing something" is - yes but it it is being done in the portfolio asset allocation, behind the scenes.

But that's not being done by the advisor........

MK62

Chooser wrote: »

Thanks for replies, dunstonh I think it's not doing well because I have less money than I put in, I do understand that values go up and down but so far the IFA is the only one getting anything (£2.5k in fact). I also understand that it should all be measured over 5 years not 18 months, however I took out a little account with the nutmeg deal featured on MSE a couple of months ago, robo something, that is currently showing at +3.5% over the short period. And the Tatton valuation is via the Aviva portal so current, as of yesterday. I have contacted the IFA who said he'd ring me today but hasn't done so. Don't suppose anyone would like to help me choose my vanguard fund out of the 72 listed?/

Which funds have you been put into?


At the end of the day, only you can decide on what value you have received for your money - without any details of what you are actually invested in, why, and exactly when you were invested in it, it's hard to comment specifically on your ISA's performance.
However, on the face of it, it doesn't look that good tbh.