IFA Charge

redmalc

I have just been to see a new IFA and i felt relaxed by his comments and in total we are transferring 550k into his management in a Pension and an isa.
I have been quoted a fee of 0,5% for him to fully manage the portfolio on my behalf which I think is competitive, any comments on his fee 
Would be helpful

dunstonh

Exactly on the nose in terms of expectation.

fred246

It's up to you. If you think £2750 is good value to do a 10 minute check on your investments every year. Alternatively you could add that money to your pension or buy a nice car or a holiday or a ....

[Deleted User]

A one-off review might be worth it, particularly if you know nothing and the adviser is good. Neither is a given.  You should still learn enough so you understand the advice and can make an informed decision.  The outcome should be a solid investment policy statement that you can stick to and a simple cost efficient diversified portfolio meeting your IPS.

Ongoing fees are only ever worth it if you have very special circumstances.  Its not just the fees. Its the loss of returns and compounding on the fees had they been invested by you. Once you decided on the appropriate asset allocation and a suitable investment vehicle, modern portfolios are so simple to run that another “management” layer is completely redundant. 

tacpot12

Deleted_User said:

A one-off review might be worth it, particularly if you know nothing and the adviser is good. Neither is a given.  You should still learn enough so you understand the advice and can make an informed decision.  The outcome should be a solid investment policy statement that you can stick to and a simple cost efficient diversified portfolio meeting your IPS.

Ongoing fees are only ever worth it if you have very special circumstances.  Its not just the fees. Its the loss of returns and compounding on the fees had they been invested by you. Once you decided on the appropriate asset allocation and a suitable investment vehicle, modern portfolios are so simple to run that another “management” layer is completely redundant. 

While I tend to agree with Mordko (most people's situations don't change often enough warrant an annual review), someone needs to keep an eye on the specific investments in your portfolio in case any of them changes so that they become less suitable over time. (Checking the investments are still suitable might be something that is done in a regular every four or five years, or when your investment needs change e.g. with the onset of ill health).

There is a question as to who will take prompt action if one of the investments runs into problems? I don't know if IFAs ever work on a retainer basis where you pay a small fee per year for the right to be able to pick up the phone and ask for some prompt advice at a set rate per hour, but this sort of arrangement might suit someone who was managing their portfolio themselves. I'm not sure if the fees for annual reviews would cover this, or whether this is part of the Discretionary Wealth Management function that dunstonh has mentioned in other posts. 

Alexland

If you are going to buy advice the fee seems reasonable. There are costs involved in running a business to provide advice so I doubt you will find anywhere cheaper. You don't mention any initial fee so I assume there is none which is good. Still it is several thousand pounds per year so you would need to be reasonably sure that their help would likely give you a better result than how you would manage the money if doing it yourself. Have they given any indication on the total costs for the portfolio they would likely run for you? Anything above 1% total would be a concern.

Prism

Like anything else, if you feel that this provides a good service for a reasonable fee then go with it. In this case you won't really know until after a few years so keep it under review. Some people are a little bit too focused purely on low fees where a good outcome after fees is what most people want. That advisor fee seems about right as long as you are also happy with the platform fee for the investments plus the average fund fees. Overall I expect this might be a total of 1.5%. The funds I use tend to fall somewhere between costs of 0.1% and 0.9%.

[Deleted User]

redmalc said:

I have just been to see a new IFA and i felt relaxed by his comments and in total we are transferring 550k into his management in a Pension and an isa.
I have been quoted a fee of 0,5% for him to fully manage the portfolio on my behalf which I think is competitive, any comments on his fee 
Would be helpful

Don't become too relaxed, redmalc, the ups and downs are still yours to bear alone.
Rather than look at the fee in isolation, calculate what it might cost you blessed with a long life.
#boiling frog 

jimi_man

ZingPowZing said:

redmalc said:

I have just been to see a new IFA and i felt relaxed by his comments and in total we are transferring 550k into his management in a Pension and an isa.
I have been quoted a fee of 0,5% for him to fully manage the portfolio on my behalf which I think is competitive, any comments on his fee 
Would be helpful

Don't become too relaxed, redmalc, the ups and downs are still yours to bear alone.
Rather than look at the fee in isolation, calculate what it might cost you blessed with a long life.
#boiling frog 

To the OP, I think you need to look at it differently.

On the basis that you can't/don't want to do the work yourself, what would happen if you did nothing at all? And how much better off would you be by employing the services of the IFA - i.e. what benefit do they bring? And that's not necessarily all financial. 

It's like anything else in life - car servicing and repairs or plumbing for example. Not too difficult to do yourself but if you don't have the time, inclination or the know-how then you can pay someone else to do it. Sure, over a long period of time the costs will add up but that's the same with anything. 

Obviously you could buy a book and learn how to do it yourself - again the same applies to car repairs, plumbing, etc etc. You might be successful or you might make a mess of it, so you need to do a cost/benefit analysis to calculate value and see if (to you) it represents good value.

Albermarle

redmalc said:

I have just been to see a new IFA and i felt relaxed by his comments and in total we are transferring 550k into his management in a Pension and an isa.
I have been quoted a fee of 0,5% for him to fully manage the portfolio on my behalf which I think is competitive, any comments on his fee 
Would be helpful

As already said it is a pretty standard charge for this size of fund but check what other charges there might be , like an initial charge , or pensions and ISA transfer charge .

[Deleted User]

“ It's like anything else in life - car servicing and repairs or plumbing for example. Not too difficult to do yourself but if you don't have the time, inclination or the know-how then you can pay someone else to do it. Sure, over a long period of time the costs will add up but that's the same with anything. ”

Not really. A plumber charges once for the time he spends. Cars with computers have become harder to service. Financial products on the other hand have become much easier. A single multiasset fund buys the world for you for a very reasonable cost.  You are already paying for someone to look after that money - the fund manager. That should be a top expert  representing organizations managing  trillions of pounds, not a guy from a corner shop who did a 4 months training course. 

A plumber does not get payed annually. Money does not drip into his account as he sleeps.  He does not charge you for repairing the same leak again and again and again.  An adviser charging an annual fee does all of the above. Not only the “profit” gets charged but the original capital. If you are with him for 30 years then the capital gets charged 30 times.