Costs of financial help

icklehelen

To cut a long story short my mum is due to inherit a decent amount of money sometime in the near future (waiting for probate). There are 2 estates, her brother's and my dad's.

She is in a care home and I am her LPA for property and financial affairs. I need to ensure that along with her income she has enough money to pay for her care and other requirements. She has mixed dementia and vascular Alzheimers but is very early stages and seems very well at the moment.

My solicitor has put me in touch with a financial advisor who I have met and talked through the basics. They gave me their paperwork to read through. I am quite shocked by their fees but as I have never dealt with investing before I am unsure if this would be worthwhile to pay, knowing that they are doing the work for me.

I believe there will be approx. £350,000 to invest (may be more depending on what we decide to do with the properties involved) On that tier of investment, this company have a charge of 3% for initial advice and implementation and an ongoing review at 0.75%.

Does this sound too much or is this a sensible amount for a company who will be advising me from start to finish?

As I dip my toes into this world I hope to understand it more myself but until I get over losing my dad and uncle and feel more in control of things again this is not a priority.

talexuser

The charges seem a little high to me, look up INDEPENDENT financial advisers in your area and get some other quotes.

My Mum was in the same situation, went in when she was relatively fine, just the assessors said she was unable to carry on in her own home after a mishap, the (good in our area) care home was around 40k a year, I had arranged her ISA for years and was able to cover with the dividends, state and private pensions and her attendance allowance (the home might be able to advise about claiming about this).

The average stay in a care home (as opposed to nursing home) is around 2 and 3 years, you don't say how old your Mum is. At least you are in the good situation where the costs should be covered and she will be looked after.

The question for the adviser is are you happy to keep the money in savings accounts, perhaps some in a "ladder" of fixed rate accounts for several years into the future as the lowest risk option, or use dividend paying funds at the lower end of the risk scale, perhaps in an ISA for her, to get some inflation protection, or any combination of the two. I kept a couple of years worth of fees easily available for safety.

fwor

Over £10k for initial advice does seem like a lot of money! It depends on your willingness to spend your own time in understanding the options and taking responsibility for her funds.

I had a similar situation with my mother, with a slightly smaller amount, but the principle is the same - as long as you can demonstrate that you have acted in your mother's best interests and have a rational basis for your investment decisions, you should be Ok (IMO) to DIY.

Our choices were based on an assumption that, statistically, my mother was unlikely to survive for more than 5 years, and that Stock Market and similar investments would not be appropriate in such a short timeframe. So almost all of her funds were placed in a range of short- and long-term savings accounts. If such a simple situation applies in your case, it's quite possible that you won't need professional financial advice at all and can simply DIY on her behalf.

Albermarle

3% and then ongoing 0.75% is not unusual. However due to the relatively large ( but not huge ) amount of money involved , I think if you shop around you might get a better quote . Say 2% and 0.5%.

As said have a look around for IFA's in your area. Normally the first 'get to know you' meeting is free with no obligations.

redmalc

I paid nothing for initial advice and 0,25% for ongoing advice on a 500k pension and S&S isa

LHW99

If the independent advisor is a member of SOLLA, they could also look at whetheran immediate care needs anniuty would beappropriate, which would cover the care fees (or most of) for as long as required.
This means some capital is used, and disappears if your mother's health deteriorates quickly, but takes away the worry of her living (and hence having to fund the fees) for an unusually long time.

SonOf

On that tier of investment, this company have a charge of 3% for initial advice

That is very high. You would expect the tiering to have dropped that a lot more. However, there are FA firms out there that charge a lot more than that. £3k ballpark would be a better target figure and an IFA, not an FA.

jaybeetoo

I am against charging a percentage of the assets - the work involved for £250k of assets is probably similar as £350k of assets. See if the IFA will consider a fixed price.

There was an article in The Sunday Times about Bancroft Wealth offering flat-fee financial advice.

Malthusian

LHW99 wrote: »

If the independent advisor is a member of SOLLA, they could also look at whetheran immediate care needs anniuty would beappropriate, which would cover the care fees (or most of) for as long as required.

To be pedantic, any independent financial adviser will look at an immediate needs annuity in this situation. (If they don't they're not independent.) There is nothing special about being a member of SOLLA in that regard.

SOLLA are a good place to look for IFAs, but there are equally capable IFAs who aren't members of SOLLA (as not all need the marketing channel).

The fees are high. Not obscene, but high. Bear in mind that if they recommend an immediate needs annuity and do not recommend long-term investment, there is no 0.75% ongoing fee. (Given her situation long-term investment may not be appropriate, and some advisers would dismiss it out of hand even if it potentially could be.) Immediate needs annuties are an inherently high-risk area, as is planning for elderly and vulnerable clients in general. You could probably find cheaper elsewhere or haggle the fee down, but don't expect a loss-leader offer.

segovia

Initial fees are expensive and ongoing is also expensive. My view is that it would take an "experienced" advisor a day to review your situation, a day to put together some options and a day to complete the paperwork. £500.00 a day is good wages for a professionally trained and competent advisor. Set a budget of £1,500.00 and don't get locked into ongoing fees indefinitely. Some IFA's are only interested if you agree to the ongoing fees indefinitely, check if you can opt-out of the agreement and fees after a year. Assuming no growth you would be paying a minimum of £36,000.00 in fees over 10 years. and don't forget you are potentially playing fund/platform fees on top of those figures. J

[Deleted User]

segovia wrote: »

Initial fees are expensive and ongoing is also expensive. My view is that it would take an "experienced" advisor a day to review your situation, a day to put together some options and a day to complete the paperwork. £500.00 a day is good wages for a professionally trained and competent advisor. Set a budget of £1,500.00 and don't get locked into ongoing fees indefinitely. Some IFA's are only interested if you agree to the ongoing fees indefinitely, check if you can opt-out of the agreement and fees after a year. Assuming no growth you would be paying a minimum of £36,000.00 in fees over 10 years. and don't forget you are potentially playing fund/platform fees on top of those figures. J

Agreed.

Perhaps the decades of easy money are over for financial advisers.