Do these ISA charges seem correct?

Iiyama

Hi all

We have around £30000 each invested through our financial advisor for the last few years. Recently we had an annual review and it showed that in the last 12 months the ISA had made over 3% interest. All good we thought.
We then looked at the ongoing charges and they breakdown something like this:
Ongoing advisor fee 0.75%
Investment charge 1.44%
Transactional Charges 0.09%


As you can see this totals 2.28% in charges per £30000 or a total of £1387. Then the interest rate return of over 3% looks less attarctive as it appears we are paying a lot in fees.


Does this look right to you? Is this the normal level of fee charged?

Mr.Saver

Yes, that looks about right.

0.75% advisor fee isn't cheep, but it's not on the expensive side either.
1.44% OCF is something you could get from an actively managed fund.
0.09% Transactional Charges is in the reasonable range too.

Your 3% "interest" (which probably is "return") is not too far off either.

To improve your (actual) return, you could ask your advisor to choose low cost funds. Most passive funds charge you less than 0.5%, and they often also have lower transactional cost. Even on the active funds side, many are around 1%.

Prism

Its a bit on the high side for the Investment charge I would say but not far off. As for the 3% return, this last year has been volatile. This time last year the markets began to drop and this continued until December.

jamei305

How does it compare to your previous annual reviews?

AnotherJoe

Its not "interest" its returns.

Might seem trivial but keep interest and returns apart, they are different things
1.44% is high charges
Just looked at one of my SIPPs, that made 7% return after all charges compared to one year ago today.
Charges were about 0.3%

That is just based on global index trackers.
No IFA charge as i dont have one. From what i read your IFA charge is a little high especially (in my book) if they have put you in such high charging funds.
So I'm starting off with a 2% upside compared to you and that 2% is more than a 1/4 of the returns.
Over the years that would mount up.

Look at educating yourself and ultimately self managing.
https://theescapeartist.me/2015/09/07/honey-i-fired-the-financial-adviser/

Alexland

The problem is that it's not economic for an advisor to provide you a personal ongoing service on an account valuation of only £30k each. Unless there is anything special about your circumstances that require specific advice it would have been better if they had told you this at the start.

If you had invested in the forum favourite 'bland' balanced risk investment fund Vanguard LifeStrategy 60 via their S&S ISA then you would have seen a 6.89% return in the past 12 months and paid only a 0.15% platform fee.

https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-60-equity-fund-accumulation-shares
https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa

Alex

AnotherJoe

Alexland wrote: »

The problem is that it's not economic for an advisor to provide you a personal ongoing service on an account valuation of only £30k each. Unless there is anything special about your circumstances that require specific advice it would have been better if they had told you this at the start.

If you had invested in the forum favourite 'bland' balanced risk investment fund Vanguard LifeStrategy 60 via their S&S ISA then you would have seen a 6.89% return in the past 12 months and paid only a 0.15% platform fee.

https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-60-equity-fund-accumulation-shares
https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa

Alex

Oops I misread the OP and thought it was £300k not £30k. All those 0's easy to miscount without a comma.

Makes no sense having an IFA for £30k. As you say just pick the funds (or even just one fund) that covers the risk level you are comfortable with and DIY.

Iiyama

Thank you all for the responses and education. As you can tell we are new to this and you have kindly given us both some reading to do.


We have more to invest again but I felt at this recent review that although the return of over 3% was better than keeping it in a savings account. Once the fees came off it "felt" that it wasn't doing so well.



Compared to the previous year the return is much better, although I cant recall the fees!

Alexland

If you are contributing more then even the Vanguard Investor 0.15% platform fee would start getting expensive. On £30k it's £45pa and growing...

If contributing regularly then a Halifax Share Dealing ISA is £12.50 pa plus £2 per regular scheduled trade (£36.50 pa) although they charge £12.50 for an adhoc trade. If you have more of an adhoc trade pattern then consider iWeb (run by Halifax SD) who charge £25 setup then £5 per trade.

On HSD or iWeb you can still invest in multi asset funds such as Vanguard LifeStrategy 60 or HSBC Global Strategy Balanced. Remember to pick the accumulation version of the fund if you don't need the income as it would otherwise cost trade fees to reinvest.

Alex

wjr4

The return is also based on the risk you are taking. You have to compare apples with apples.

mark5

I wouldn’t use an advisor anyway but if you feel you need to and your investments are the same for both, why not keep the advisor for 1 of you and just copy with the other funds.