IFA Ongoing Fees

lisyloo

bostonerimus wrote: »

Still if people have a bit of self confidence and a bit of common sense I firmly believe that they don't need on going help from an IFA..

That may be true given your ifs.
However the number of people (on here) that don’t know the basics - like their state pension age and cannot read what paperwork says (regarding forecasts or COPE) for example, means we might not agree on what % of the population can acheive those criteria.

cloud_dog

bostonerimus wrote: »

Sure, silly decisions lead to losses. The thing is that things don't need to be complicated and there are a few simple rules that people can follow that will increase the chances of success. I'm positive that I can do anything a good IFA can do and I have the ability to make sensible choices. I think most people can do that as well and the aura around the IFA is really just that, a feeling of safety and that they can't produce much benefit as long as the DIYer is sensible....in the best case the IFA is just selling that common sense and that can be had free of charge.

I think you're being disingenuous and I firmly belive that most people are either not able or not willing to make those choices (for many many different reasons).

Audaxer

cloud_dog wrote: »

They may make you more money but that may be a side effect of efficient tax planning or use of tax efficient vehicles.

If I was paying an IFA to manage my portfolio, which is all within S&S ISA wrappers, I would be looking for the IFA to create a portfolio of funds with the most appropriate asset allocation for my risk tolerance. If I was paying for ongoing advice I would hope he/she would monitor and change funds if and when required, and adjust weightings if and when required.

I would hope that by putting together and monitoring a properly structured portfolio, they would be able to maximise returns with lower volatility for my risk level?

cfw1994

lisyloo wrote: »

I don’t entirely agree.
I think my IfA will make me more money and/or reduce my exposure to risk because they know which are the best funds to pick at the best cost and in which combination.
They might actually make me a bit less but with substantially less exposure to risk - that combination would be fine to me.

But IMO their fund picking expertise and their constant vigilance (not a one-off activity) is worth the extra cost.

I think I could so the same activity and save fees in the same way as I could service my car, clean my own windows, clean my own gutters, but with finite life there are sometimes things we would choose to pay others to do.

Imagine you won the lottery and didn’t like cooking, well you may well employ a cook.

I don’t have an issue with DIY if that’s what others want to do but we don’t all have the time/inclination.

Why shouldn’t we be able to pay someone if we want?

Just to chime in: I don’t think anyone says we all have to DIY, & clearly you have a good experience using your IFA :beer:

I would agree that the vast majority of the population need some guidance on finances: heck, we don’t educate anyone on them, how would they know! I’ve tried hard to get our children (now early 20s) to understand about money, the value of it and how to save for short and long term, but it isn’t always easy!

I do feel in today’s world of information access that the data is far more easily available for those who are interested to “take control”: having that choice is good, and for an interested and competent DIYer, will likely save a chunk of money over the long term. Example here.

I am equally sure that for many, “peace of mind” or just lack of interest makes an IFA a valuable “team mate”.

I suspect a large number on this forum *are* interested (by dint of joining these chats!), so there will be more DIYers here than in general.

Each to their own, but even those handing over control should take an interest in what is being done (& I suspect all here very much do!): I personally believe the best person to give you financial advice will always ultimately be you, whether that be guided by an IFA, tied FA, or DIY....

whatsup7

bostonerimus wrote: »

Giving up 60% of your profit to platform, fund and advisor fees is ridiculous.....sorry, but you are being fleeced. As a comparison my portfolio fees are 0.07% and I’ve been averaging 8.5% annual return so I’m paying 0.8% of my profits in fees

I didn’t think it was possible to get the fees that low, care to expand a bit?

[Deleted User]

whatsup7 wrote: »

I didn’t think it was possible to get the fees that low, care to expand a bit?

He is in the States. In Canada my fees are 0.1% of the portfolio/yr. Would have been a bit less but I have around 10% of the funds in the UK.

I am pretty sure <0.2% is achievable even in Britain with a reasonable pot size. You can use ETFs costing 0.07%/yr plus ~£150/yr for the SIPP platform and a few trades.

shinytop

I have a SIPP in II that costs £240/year. £400k in that would be 0.06%. The 'big name' composite trackers (Vanguard, HSBC, etc.) are circa 0.2%. So an easy <0.3%. If you do a lot of trades it will push it up a little. If you use single index trackers you can get that 0.2% to below 0.1%. So <0.2% is acheivable even with unit trusts.

It's when you use a % based arrangement like HL where, at 0.45%, larger pots get more expensive.

lisyloo

Some of us are unable to get the low fees because we have to use the pensions provided by our employers if we want their contribution or indeed the benefits of salary sacrifice.
My last employer used HL, but I’ve moved that out now to my Novia SIPP.
My current employer uses an MPP.

I’ve never had a choice in my 29 years in IT jobs of where my contributions go, although I have been able to transfer out which has become cheaper in recent years.

BTW - I did try to get information about transferring one of me pensions DIY with the help of these forums. I was advised to ask about charges and guaranteed benefits. This approached failed to uncover a non-guaranteed benefit that my IFa advised me of (enhanced A-day lump sum).
So an example of a failure of DIY and that after consulting this forum for advice on exactly what questions to ask (because of you don’t ask explicitly the right ones you don’t get the right answers). I have kept that old pension because of the benefit.

Prism

lisyloo wrote: »

Some of us are unable to get the low fees because we have to use the pensions provided by our employers if we want their contribution or indeed the benefits of salary sacrifice.

The fee's on my wife's work pension are pretty good at 0.39% including fund costs, however due to limited fund choice she does a partial transfer roughly once a year into a SIPP. I assume quite a few work DC pension schemes allow this.

bostonerimus

cloud_dog wrote: »

I think you're being disingenuous and I firmly belive that most people are either not able or not willing to make those choices (for many many different reasons).

Willing and not able are different things. The not willing will definitely nee help, but I think most people could successfully manage their finances by following some simple rules. In the US these rules were famously summarised on the back of a postcard, replace 401k with SIPP or company pension plan and add in ISA etc and this works for the UK too.

https://www.npr.org/sections/alltechconsidered/2016/01/08/462250239/when-an-index-card-of-financial-tips-isnt-enough-this-book-is-there

The unfortunate thing is that many people have been persuaded that investing is complicated when it isn't. It might not be easy to do, but it is simple and within the abilities of most people. The finance industry has a vested interest in making this seem difficult, it simply isn't.