IFA locking me in to ongoing fees

SonOf

I think technology is changing the market and the role of an IFA isn't what it used to be, DIY is more achievable for the novice.

I work in an IFA office and we had someone come in yesterday who invested in a SIPP wtih HL on a DIY basis. He had invested in three HL MM funds and was paying more in annual charges than what we offered under advice He had also made a bad transaction because he didnt know the alternatives. A transaction that is likely to cost him tens of thousands of pounds in unnecessary tax.

DIY doesnt mean you save money if you do the wrong thing.

I have to be honest and say the current IFA charges are very reasonable, he just hasn't listened and fully understood my requirements, I want the flexibility of independence and I don't want to be locked into an ongoing relationship indefinitely.

Personally, I think your IFA is not a real IFA. He may be using the IFA tag but it sounds like one of the many wealth management firms that are transitioning away from IFA to put everything they do onto a single platform with a single DFM and their model is reoccurring income and they dont want the transactional stuff. i.e. acting as an FA rather than an IFA. A lot of these Wealth Management firms have been told to drop the IFA tag and revert to FA. However, it does seem to be that they wait until they are told to do it.

If they are operating their own in-house DFM, then will have to have a degree of ongoing charge as they are the investment management side and you cant have that without paying for it.

segovia

SonOf wrote: »

I work in an IFA office and we had someone come in yesterday who invested in a SIPP wtih HL on a DIY basis. He had invested in three HL MM funds and was paying more in annual charges than what we offered under advice He had also made a bad transaction because he didnt know the alternatives. A transaction that is likely to cost him tens of thousands of pounds in unnecessary tax.

DIY doesnt mean you save money if you do the wrong thing.



Personally, I think your IFA is not a real IFA. He may be using the IFA tag but it sounds like one of the many wealth management firms that are transitioning away from IFA to put everything they do onto a single platform with a single DFM and their model is reoccurring income and they dont want the transactional stuff. i.e. acting as an FA rather than an IFA. A lot of these Wealth Management firms have been told to drop the IFA tag and revert to FA. However, it does seem to be that they wait until they are told to do it.

If they are operating their own in-house DFM, then will have to have a degree of ongoing charge as they are the investment management side and you cant have that without paying for it.

Apparently, all the advisers who work for Vision are self employed IFA's

bostonerimus

segovia wrote: »

I would like to walk away and not pay anything but I fear I am obliged to pay the fixed fee for the advice. Expensive mistake, I should have trusted my own judgment and managed my own risks,

I'll never engage with another IFA after this and if anyone asked my opinion I would say advise to do the same.

Walk away, if you haven't signed anything then why would you have to pay.

segovia

bostonerimus wrote: »

Walk away, if you haven't signed anything then why would you have to pay.

I am not the type of person to renege on an agreement verbal or otherwise. I agreed on the fixed fee, I am happy with DMF he is recommending, a little bit more on the fees than I was expecting but I believe its worth a punt for a year or more. And for a DMF the fees seem reasonable compared with a bespoke DMF.

My main concern is being locked in indirectly by the terms of the SIPP which is 100% advisory driven and the fact that there is a commercial relationship between the investment vehicle and the IFA firm. Maybe it was an oversight or the relationship was purposely hidden, I don't know.

When I look at my alternatives i.e. a DIY SIPP it makes me nervous.

Undecided J

beamyup

segovia wrote: »

When I look at my alternatives i.e. a DIY SIPP it makes me nervous.
Undecided J

Why?

You seem to know what you are doing. You just wouldnt be paying an IFA big £££ to make you feel like you were not taking risks.

wjr4

Just out of interest, where did you find this adviser? Unbiased? Recommendation?

segovia

wjr4 wrote: »

Just out of interest, where did you find this adviser? Unbiased? Recommendation?

Just a web search, I can't remember what I searched on, it wasn't IFA + locality. It was probably something related to my wifes DB scheme, we have been debating for about 4 years whether we should transfer or keep it. We concluded that we had to go down the IFA route to seek advice.

The viability of the DB transfer was part of the review that was undertaken by the IFA which and concluded in a decision to keep it.

This decision to keep in part was 1, its a guaranteed income for life, 2, IFA's seem to be getting nervous about DB transfers and PI insurance premiums are rising pending another PPI type scandal.

He wasn't really interested in taking the DB on even if it was viable.

J

bostonerimus

segovia wrote: »

I am not the type of person to renege on an agreement verbal or otherwise. I agreed on the fixed fee, I am happy with DMF he is recommending, a little bit more on the fees than I was expecting but I believe its worth a punt for a year or more. And for a DMF the fees seem reasonable compared with a bespoke DMF.

J

OK then you will have to deal with an IFA that looks a bit dubious. IMHO the right thing to do here is to walk away as when one party breaks an agreement then you are under no obligation to honour what you might think is your part of it and if there's nothing signed that goes double. This could cost you thousands of pounds for what seems to be bad service. Don't compromise with your money, you aren't being nice here, you're just being taken for a ride and the worst thing is you know it and are still getting in the car.