IFA ongoing fee..Why pay?

bowlhead99

BananaRepublic said:

Prism said:
I work in IT and get charged out at an average of about £500 per hour and sometimes more (this week is over £1000 per hour). Like you say there is a whole company of fixed costs, staff, admin and taxes to pay for before I get my bit out of that. Completely different job but £250 an hour doesn't sound that much to me.

You are charged out at a hell of a rate. A typical IT contractor will charge ~£40-80 / hour plus the agents cut, so let’s say up to £100/ hour. 

The IT contractor will provide themselves to a company on a contract for months at a time at that 'low' price per hour, but the company that has got him signed up to that long term contract may charge out the time of their specialists (whether employed or working under contract) to their clients at £500 per hour just like  Prism said.

Prism

Cus said:

From what I recall, an IT consultancy in financial services would charge the client firm anything from £1000 a day for a junior to £7500 a day for a senior head. Contractors would be a lot less, say £400 to £1250 a day.  

Part of the problem is that these numbers are normal in business to business transactions. Obviously IFAs are business to consumer and therefore the cost might seem excessive if we don't remember that the business itself eats up the majority of that fee in costs.

Niv

What are the merits of doing a blend? If I have a managed via a IFA S&S ISA this year. what's to stop me opening a new one next FY and mirroring the portfolio therefore still getting the advice and paying on one ISA but then adding to the new one going forwards?

BananaRepublic

bowlhead99 said:

BananaRepublic said:

Prism said:
I work in IT and get charged out at an average of about £500 per hour and sometimes more (this week is over £1000 per hour). Like you say there is a whole company of fixed costs, staff, admin and taxes to pay for before I get my bit out of that. Completely different job but £250 an hour doesn't sound that much to me.

You are charged out at a hell of a rate. A typical IT contractor will charge ~£40-80 / hour plus the agents cut, so let’s say up to £100/ hour. 

The IT contractor will provide themselves to a company on a contract for months at a time at that 'low' price per hour, but the company that has got him signed up to that long term contract may charge out the time of their specialists (whether employed or working under contract) to their clients at £500 per hour just like  Prism said.

Eh? £500 / hour might be the London rate, for niche work such as finance with scarce skills and experience. We’re talking about a bog standard IFA here, not some gold plated, diamond encrusted specimen. The bog standard IFA should be compared to a more typical IT contractor. You have to add on overheads of course. 

barnstar2077

Niv said:

What are the merits of doing a blend? If I have a managed via a IFA S&S ISA this year. what's to stop me opening a new one next FY and mirroring the portfolio therefore still getting the advice and paying on one ISA but then adding to the new one going forwards?

As I understand it they tend to charge a larger percentage for smaller amounts, but it would still be cheaper if you were talking about a lot of money though.  If you wanted to, then I suppose you could have several of your friends use the same advice and split the cost.  You would all need to be in roughly the same financial situation though.  Alternatively you could all spend some time learning about finances and then pool your knowledge.  Edit:  Or you know, use some kind of forum! :  )

Prism

BananaRepublic said:

bowlhead99 said:

BananaRepublic said:

Prism said:
I work in IT and get charged out at an average of about £500 per hour and sometimes more (this week is over £1000 per hour). Like you say there is a whole company of fixed costs, staff, admin and taxes to pay for before I get my bit out of that. Completely different job but £250 an hour doesn't sound that much to me.

You are charged out at a hell of a rate. A typical IT contractor will charge ~£40-80 / hour plus the agents cut, so let’s say up to £100/ hour. 

The IT contractor will provide themselves to a company on a contract for months at a time at that 'low' price per hour, but the company that has got him signed up to that long term contract may charge out the time of their specialists (whether employed or working under contract) to their clients at £500 per hour just like  Prism said.

Eh? £500 / hour might be the London rate, for niche work such as finance with scarce skills and experience. We’re talking about a bog standard IFA here, not some gold plated, diamond encrusted specimen. The bog standard IFA should be compared to a more typical IT contractor. You have to add on overheads of course. 

As pointed out earlier in the thread the overheads might be 80% of the value of the fee for an IFA

The actual value per hour or day is not really the important point. This week I am generating around £8500 per day from clients in income. Other weeks it might be zero. More likely its around half that. The back end overheads of running a business can be huge.

BananaRepublic

Prism said:

BananaRepublic said:

bowlhead99 said:

BananaRepublic said:

Prism said:
I work in IT and get charged out at an average of about £500 per hour and sometimes more (this week is over £1000 per hour). Like you say there is a whole company of fixed costs, staff, admin and taxes to pay for before I get my bit out of that. Completely different job but £250 an hour doesn't sound that much to me.

You are charged out at a hell of a rate. A typical IT contractor will charge ~£40-80 / hour plus the agents cut, so let’s say up to £100/ hour. 

The IT contractor will provide themselves to a company on a contract for months at a time at that 'low' price per hour, but the company that has got him signed up to that long term contract may charge out the time of their specialists (whether employed or working under contract) to their clients at £500 per hour just like  Prism said.

Eh? £500 / hour might be the London rate, for niche work such as finance with scarce skills and experience. We’re talking about a bog standard IFA here, not some gold plated, diamond encrusted specimen. The bog standard IFA should be compared to a more typical IT contractor. You have to add on overheads of course. 

As pointed out earlier in the thread the overheads might be 80% of the value of the fee for an IFA

The actual value per hour or day is not really the important point. This week I am generating around £8500 per day from clients in income. Other weeks it might be zero. More likely its around half that. The back end overheads of running a business can be huge.

I find it hard to believe that overheads are 80% of the fee. Maybe someone with first hand experience can comment. 

Prism

BananaRepublic said:

Prism said:

BananaRepublic said:

bowlhead99 said:

BananaRepublic said:

Prism said:
I work in IT and get charged out at an average of about £500 per hour and sometimes more (this week is over £1000 per hour). Like you say there is a whole company of fixed costs, staff, admin and taxes to pay for before I get my bit out of that. Completely different job but £250 an hour doesn't sound that much to me.

You are charged out at a hell of a rate. A typical IT contractor will charge ~£40-80 / hour plus the agents cut, so let’s say up to £100/ hour. 

The IT contractor will provide themselves to a company on a contract for months at a time at that 'low' price per hour, but the company that has got him signed up to that long term contract may charge out the time of their specialists (whether employed or working under contract) to their clients at £500 per hour just like  Prism said.

Eh? £500 / hour might be the London rate, for niche work such as finance with scarce skills and experience. We’re talking about a bog standard IFA here, not some gold plated, diamond encrusted specimen. The bog standard IFA should be compared to a more typical IT contractor. You have to add on overheads of course. 

As pointed out earlier in the thread the overheads might be 80% of the value of the fee for an IFA

The actual value per hour or day is not really the important point. This week I am generating around £8500 per day from clients in income. Other weeks it might be zero. More likely its around half that. The back end overheads of running a business can be huge.

I find it hard to believe that overheads are 80% of the fee. Maybe someone with first hand experience can comment. 

I was using this post as an example
https://forums.moneysavingexpert.com/discussion/comment/77970589/#Comment_77970589

I am not trying to argue if the fee for an IFA is worth it or not. I don't pay one. However running a business is an expensive thing to do. From my example in your quoted post I get nothing like that fee taken from clients after all of the overheads.

bowlhead99

BananaRepublic said:

bowlhead99 said:

BananaRepublic said:

Prism said:
I work in IT and get charged out at an average of about £500 per hour and sometimes more (this week is over £1000 per hour). Like you say there is a whole company of fixed costs, staff, admin and taxes to pay for before I get my bit out of that. Completely different job but £250 an hour doesn't sound that much to me.

You are charged out at a hell of a rate. A typical IT contractor will charge ~£40-80 / hour plus the agents cut, so let’s say up to £100/ hour. 

The IT contractor will provide themselves to a company on a contract for months at a time at that 'low' price per hour, but the company that has got him signed up to that long term contract may charge out the time of their specialists (whether employed or working under contract) to their clients at £500 per hour just like  Prism said.

Eh? £500 / hour might be the London rate, for niche work such as finance with scarce skills and experience. We’re talking about a bog standard IFA here, not some gold plated, diamond encrusted specimen. The bog standard IFA should be compared to a more typical IT contractor. You have to add on overheads of course. 

Prism said:

BananaRepublic said:

Prism said:

BananaRepublic said:

bowlhead99 said:

BananaRepublic said:

Prism said:
I work in IT and get charged out at an average of about £500 per hour and sometimes more (this week is over £1000 per hour). Like you say there is a whole company of fixed costs, staff, admin and taxes to pay for before I get my bit out of that. Completely different job but £250 an hour doesn't sound that much to me.

You are charged out at a hell of a rate. A typical IT contractor will charge ~£40-80 / hour plus the agents cut, so let’s say up to £100/ hour. 

The IT contractor will provide themselves to a company on a contract for months at a time at that 'low' price per hour, but the company that has got him signed up to that long term contract may charge out the time of their specialists (whether employed or working under contract) to their clients at £500 per hour just like  Prism said.

Eh? £500 / hour might be the London rate, for niche work such as finance with scarce skills and experience. We’re talking about a bog standard IFA here, not some gold plated, diamond encrusted specimen. The bog standard IFA should be compared to a more typical IT contractor. You have to add on overheads of course. 

As pointed out earlier in the thread the overheads might be 80% of the value of the fee for an IFA

The actual value per hour or day is not really the important point. This week I am generating around £8500 per day from clients in income. Other weeks it might be zero. More likely its around half that. The back end overheads of running a business can be huge.

I find it hard to believe that overheads are 80% of the fee. Maybe someone with first hand experience can comment. 

I was using this post as an example
https://forums.moneysavingexpert.com/discussion/comment/77970589/#Comment_77970589

I am not trying to argue if the fee for an IFA is worth it or not. I don't pay one. However running a business is an expensive thing to do. From my example in your quoted post I get nothing like that fee taken from clients after all of the overheads.

I assumed BananaRepublic was talking about an experienced contractor with his £40-80hr and then the 'agent' taking their cut of £10-20 for finding them the work or for providing a veneer of legitimacy for the IT worker to be a 'contractor' rather than an 'employee' of the business that they were doing the work for. So the £40-80 plus the £10-20 add-on is the cost of getting the experienced contract worker to work for you as a quasi-employee that you don't have to put on your own payroll and provide with pensions and benefits etc.  

If I had that IT person contracting to work for my business and it was costing me £50-£100/hr to have him there for a few months, I wouldn't engage him in work that would only allow my business to invoice £50-£100/hr to customers, just the same as if I had five to ten production line workers costing me £50-100/hr between them I would hope the factory was invoicing more than £50-100/hr in widget sales.

Perhaps we are at cross purposes but the cost of getting an employee or contractor to do something is only going to be a fraction of what is invoiced as the final product.  Likewise, if an employee of an IFA firm (or any other professional services firm) wants to make a salary of £50k/ year (and the business wants to be able to pay him £5k of pension, £10k of bonus, spend £10k+ on employer NI etc), the professional services firm is going to have to charge a heck of a lot more than the implied £75-80k a year to its clients, because it needs to make enough money to cover marketing, admin staff, senior management, legal, HR, training, compliance, software licenses, hardware, furniture, rent, rates, utilities, insurances etc etc before it even starts to make a profit for the people who own the business. 

The people in Fred's meeting room comparing £250/h to their own salary of £10-40/h and thinking 'wow, £250 an hour is more than I earn' are missing the point because it is also more than the employee earns - it is the amount of money the business invoices in the hours that it is invoicing; there are other hours that aren't being invoiced where the business is still incurring costs, and there are other things the revenue is spent on before it leaves some fraction of the revenue to cover the hourly rate of the person who was physically in the room representing the company. 

BananaRepublic

Prism said:

BananaRepublic said:

Prism said:

BananaRepublic said:

bowlhead99 said:

BananaRepublic said:

Prism said:
I work in IT and get charged out at an average of about £500 per hour and sometimes more (this week is over £1000 per hour). Like you say there is a whole company of fixed costs, staff, admin and taxes to pay for before I get my bit out of that. Completely different job but £250 an hour doesn't sound that much to me.

You are charged out at a hell of a rate. A typical IT contractor will charge ~£40-80 / hour plus the agents cut, so let’s say up to £100/ hour. 

The IT contractor will provide themselves to a company on a contract for months at a time at that 'low' price per hour, but the company that has got him signed up to that long term contract may charge out the time of their specialists (whether employed or working under contract) to their clients at £500 per hour just like  Prism said.

Eh? £500 / hour might be the London rate, for niche work such as finance with scarce skills and experience. We’re talking about a bog standard IFA here, not some gold plated, diamond encrusted specimen. The bog standard IFA should be compared to a more typical IT contractor. You have to add on overheads of course. 

As pointed out earlier in the thread the overheads might be 80% of the value of the fee for an IFA

The actual value per hour or day is not really the important point. This week I am generating around £8500 per day from clients in income. Other weeks it might be zero. More likely its around half that. The back end overheads of running a business can be huge.

I find it hard to believe that overheads are 80% of the fee. Maybe someone with first hand experience can comment. 

I was using this post as an example
https://forums.moneysavingexpert.com/discussion/comment/77970589/#Comment_77970589

I am not trying to argue if the fee for an IFA is worth it or not. I don't pay one. However running a business is an expensive thing to do. From my example in your quoted post I get nothing like that fee taken from clients after all of the overheads.

I’m well aware of overheads, and down time. dunstonh cites one IFA who needs to get £100,000 in fees to earn £30,000. Well that is a low income and I’d be surprised if an experienced IFA would consider that worthwhile. It’s not hard to get such a salary without much qualifications or experience. I’m guessing an IFA who works on his/her own typically nets a salary of £50,000 upwards. Do overheads scale linearly or are they fixed costs?  Many such as an office and a computer are fixed costs and my insurance as an IT contractor was a fixed cost irrespective of clients and hours worked. So they might have to turn over a bit more then £120,000 for a salary of £50,000 to allow for extra coporation tax, employer’s NI and maybe travel. So we’re a long way down from a 1:4 ratio of salary to turnover. 

He cites another who gets 20% but we don’t know details including salary and location.