Ongoing IFA Charge & Fees

capital0ne

fred246 wrote: »

Still no reply from an IFA telling us how many hours it would take to carry out a £2k service on a pension.

Freddie, I quite agree IFA's never seem to justify their charges, basically that's why I DIY and doing very nicely thank you! It's not hard. :T

capital0ne

fred246 wrote: »

If I ask my dentist how long a check up takes he will say 15 or 20 minutes. Ask an IFA how long it takes for a pension check up and they say "pass" or "I prefer not to answer that question", or "I exercise my right to remain silent".

Why are IFAs buried 60ft underground?
Because deep down they're really nice people!

What's brown and furry and looks good around an IFAs neck?
A doberman!

capital0ne

BTW Neil Woodford said he'd be around in a mo' with some advice - he's not so busy right now! But he still charges an ongoing performance fee!

dmelife

I suppose the best place for cheap jokes is a money saving site! :rotfl:

jimi_man

I imagine that the best way to drive away all the IFAs from this site (which will be a shame as they provide some interesting and useful information) is to keep having a go at them.


It's like a lot of things: if you think they are too expensive then don't use them.

beamyup

This is a MSE forum, one of the biggest money saving ideas for pensions and investments is DIY (saving on IFA fees).

This is not appropriate for every person or in every case, however the IFAs here do not often recommend that idea as valid, in fact they may be frightening some people away from that.

I think It's important for us non-IFA contributors here to maintain the balance, but to do that without causing IFAs here to feel like they are not wanted.

The IFA contributors are really wanted and needed as they answer many many questions extremely well.

dunstonh

This is not appropriate for every person or in every case, however the IFAs here do not often recommend that idea as valid, in fact they may be frightening some people away from that.

I don't think I have seen any of the regular posting IFAs who puts anyone off DIY. Apart from perhaps on annuity purchase where it does usually make sense when the fund is over approx £25k. (as the fee from that point is usually lower than the commission on direct). The other is permanent health insurance where the distribution via direct methods is very poor.

We have certainly qualified the position that if you DIY well you can save money but if you DIY badly then it can cost you. However, that is the exact same thing in all walks of life.

segovia

dunstonh wrote: »

I don't think I have seen any of the regular posting IFAs who puts anyone off DIY. Apart from perhaps on annuity purchase where it does usually make sense when the fund is over approx £25k. (as the fee from that point is usually lower than the commission on direct). The other is permanent health insurance where the distribution via direct methods is very poor.

We have certainly qualified the position that if you DIY well you can save money but if you DIY badly then it can cost you. However, that is the exact same thing in all walks of life.

It seems that I can't win, either way, I have posted before when I was considering to transfer and self invest in a SIPP and the overwhelming advice was to use an IFA. Now that I have gone down the IFA path the advice seems to be going in the other direction

A summary of what I have learned so far from this thread

Discretionary Managed Funds attract VAT IFA's fees also attract VAT if the investment vehicle is a DMF There is no need for ongoing advice and fees from an IFA if I am in a DMF Ongoing IFA fees are questionable, what do I get for my 0.5% + Vat

dunstonh

segovia wrote: »

It seems that I can't win, either way, I have posted before when I was considering to transfer and self invest in a SIPP and the overwhelming advice was to use an IFA. Now that I have gone down the IFA path the advice seems to be going in the other direction other way.

A summary of what I have learned so far from this thread

Discretionary Managed Funds attract VAT IFA's fees also attract VAT if the investment vehicle is a DMF There is no need for ongoing advice and fees from an IFA if I am in a DMF Ongoing IFA fees are questionable, what do I get for my 0.5% + Vat

I suspect the problem with both sides is that they both assume you will be doing the best. i.e. the best DIY outcome vs the best advised outcome.

From other posts, the regular IFAs here all seem to end up with annual charges of around 0.9%-1.3% all in (assuming ongoing servicing). You can get advised solutions that take you through 2% p.a. And with DIY investors, they may be looking for 0.4% all in but you can get DIY solutions that take you through the 2% p.a.

I have set my stall out many times that I am not a fan of DFMs. I can see several that could be viable but most appear just to add a layer of charges unecessarily and make the adviser job easier (but you dont seem to get a discount on the adviser charge for that).

Discretionary Managed Funds attract VAT

Correct.

IFA's fees also attract VAT if the investment vehicle is a DMF

not correct. Unless the IFA is also the DFM and they bundle their charges (not common but does exist).

There is no need for ongoing advice and fees from an IFA if I am in a DMF

Ongoing servicing is always optional. Although it may impact on the investment decisions if you say you are going transactional. Some business models may refuse to transact if you say you want transactional.

Ongoing IFA fees are questionable, what do I get for my 0.5% + Vat

In this case yes. If the DFM is doing the investment side and you have little or nothing in the way of annual needs, then its not worth it.

cloud_dog

fred246 wrote: »

If I ask my dentist how long a check up takes he will say 15 or 20 minutes. Ask an IFA how long it takes for a pension check up and they say "pass" or "I prefer not to answer that question", or "I exercise my right to remain silent".

Fred, you are really quite simplistic in your approach to this. I understand why, it aids you in making your point.

Using your dentist analogy, I have a problem tooth, have been with the same dentist for years, he has witnessed the problem 'evolve', he is unsure what the issue is or what resolution will actually resolve the problem so, I have a wide range of possible costs and even the expert doesn't know what the cost will be in the end.

Should I throw him out with the bathwater?

Also, in your garage why are you happy to pay a garage monkey £100 per hour, surely that is an outrage!!!! How can they justify that??? Have you asked them to justify the £100 per hour cost?

To put some context around the inane debate, whilst I am very comfortable managing our finances (with a great deal of help from this site I might add), should I precede my wife there is zero chance of her understanding the finances and options available and choices that should be made (she really is not interested and would not want to bear the burden of responsibility), and if she attempted to do so the cost of the mistake(s) would far outweigh any charge by an IFA, and this is why in my guidance document to her I recommend she use an IFA.

People who need to use an IFA, need to use an IFA. People who don't need to use an IFA and are happy taking on that responsibility don't need to use one. Where's the problem again?