Increasing IFA Charges

DJL12

My IFA currently charges 0.75% but is unilaterally seeking to raise this to 2% If I refuse to sign they will terminate my current agreement, leaving me with their portfolio and platform but without guidance - is this an ombudsman issue?

Alexland

No, it's an opportunity to either go DIY or find a new IFA and transfer your investments across.

Albermarle

Could you say how large your portfolio is , as pricing is usually related to amount under management ?
A unilateral increase like this seems unusual, must be some kind of significant charging policy change .
If so better just to look elsewhere.

dunstonh

My IFA currently charges 0.75% but is unilaterally seeking to raise this to 2% If I refuse to sign they will terminate my current agreement, leaving me with their portfolio and platform but without guidance - is this an ombudsman issue?

Are you sure they are saying 2%?    The dominant figure is 0.50%.  Apart from smaller values where you see it move towards 1%.     A recent FCA review found the three most common charge levels were 0.5%, 0.75% and 1.0%.      Most platforms/providers will not facilitate a fee of 2% as it is so high.

Are you sure you are not mixing up their initial advice charge with their ongoing advice charge?  You would expect the initial to be around 2%.  Or perhaps 2% is the all in fee (platform, investments and adviser - although 2% for all in is still high unless its a small value).

And no, it is not an ombudsman issue as both you and the adviser are free to end the supply of services.

Are you sure that they are an IFA?   IFAs have to unbundle the charges to show each element before totalling it.  Whereas FAs can still bundle their charges to a total.  2% bundled charge would be the ballpark for many FAs

DJL12

Thanks everyone, its clear to me now I should have some backbone and go it alone

Alexland

DJL12 said:

its clear to me now I should have some backbone and go it alone

Welcome to the club - at least you won't be a lonely investor with MSE forums at your side.

DiggerUK

As the man said, compound interest is a marvel of humanity.
If you take £1,000 and deduct 2%pa for thirty years you end up with about £550.
If you take £1,000 and add 2%pa for thirty years you end up with about £1,800.
I'll lend you my abacus if you need it..._ 

dunstonh

DJL12 said:

Thanks everyone, its clear to me now I should have some backbone and go it alone

Do be careful though.  There are some very expensive DIY options that can result in you paying more than an advised investment option.   Particularly certain DIY platform own brand investment funds/portfolios.    If you DIY well you can save money. If you DIY badly it can be costly.  So, make sure you do your research properly

fred246

Well I am sure that if they are clever enough to know when an IFA is overcharging, then they are clever enough to know when an investment platform or investment is overcharging. It's not complicated.

csgohan4

dunstonh said:

DJL12 said:

Thanks everyone, its clear to me now I should have some backbone and go it alone

Do be careful though.  There are some very expensive DIY options that can result in you paying more than an advised investment option.   Particularly certain DIY platform own brand investment funds/portfolios.    If you DIY well you can save money. If you DIY badly it can be costly.  So, make sure you do your research properly

I agree with the above, do alot of research, I used the monevator website as a starting point and then move on from there.