IFA Fees

Albermarle

But when you are retired with your funds invested, surely any fees from an IFA would be much reduced?

The problem is that when you are still accumulating , if investments or plans go wrong , then you still have your monthly salary coming in to compensate/recover. In retirement you do not have this luxury so it is arguably more important that investments, income drawdown, tax etc are even more carefully controlled.

cfw1994

wjr4 said:

sevenhills said:

smartpicture said:

I'm somewhat surprised so many of you are against using an IFA at all - in my previous business, I charged my time out at £1200 a day, but that high rate wasn't just for a day's work, it was for my years of building up very detailed knowledge in a niche area and staying on top of everything happening in that industry that they did not have the time or inclination to do, so I guess I think of an IFA working on the same principle. But interesting to hear other views.

I just have a few thousand, so I am no expert; but surely when you are in your 50s and working, paying an IFA can be worth the money, because there are many things to take into consideration, like mortgage, income tax, pension tax relief, IHT etc.

But when you are retired with your funds invested, surely any fees from an IFA would be much reduced?

Retirement means trying to ensure the client does not run out of money by spending too much. Tax planning, estate planning, income tax planning, using tax allowances etc. It isn’t just about investment management. 

Aren't 3 of those 4 things the same thing!?
Tax planning, income tax planning, using tax allowances......it's TAX!
(okay, perhaps with subtle nuances).
I guess if you believe in making use of discretionary trusts, then there can be some benefits - those things can be complex (& of course subject to future change).     People like to 'over-complify' things.   Especially those whose own income depends on an air of mystery.   
We try to keep things simple.   
Like me  

Albermarle said:

But when you are retired with your funds invested, surely any fees from an IFA would be much reduced?

The problem is that when you are still accumulating , if investments or plans go wrong , then you still have your monthly salary coming in to compensate/recover. In retirement you do not have this luxury so it is arguably more important that investments, income drawdown, tax etc are even more carefully controlled.

I can see that it could well be more desirable as you get much older - will I still want to be shuffling spreadsheets regularly in 20 years?  Who knows!       
For me, stepping away from the Corp grind relatively early, I believe the first 10 years are at greatest risk (sequencing), and will pay attention to the funds in this time....if we have a BadPeriod™, then we will turn off the DC-tap for a period
We are also well into a document our offspring are aware of that point them to sources of information needed in any UnthinkableEvent™ leaving them to deal with things.   Having had a career dealing with disaster recovery solutions, I'm perhaps overly aware of unlikely possibilities....

fred246

Once you have a parasite they are there for life unless the host takes steps to eradicate them.

DT2001

I think you are paying too much. We have a smaller total and pay 0.5%.
I analysed all the fees as you get letters form the platforms detailing it all and then asked my IFA about anything I didn’t understand.
We work self employed p/time and when able travel regularly. As a result I tend to research ideas and strategies in fits and spurts. I then quiz the IFA. 

The reasoning for me using an IFA are a combination of factors
1.Whilst we sorted our own investments until about 5 years ago it was all in equities and at times individual shares. Minimal diversification.
2. Time. I would want to do it well so would feel the need to spend time researching.
3. Maybe oddly I’m dissuaded by this forum. There is undoubtedly a high level of knowledge displayed here but not a consensus of opinion on strategy.
4. If my IFA’s strategy achieves my goals which they are then I’m happy. 
5. As I’ve said before, I allocate an hour a week of work to cover his fee.
6. He saved me money when setting up a bonus funded pension and more when George Osborne tweaked the rules in 2015. If I hadn’t an ongoing service I wouldn’t have had the 2nd piece of advice.
7. If I die before OH I know finances are an area not requiring a steep learning curve or finding a good IFA 

TVAS

Thieves. 0.75% is too high. I bet they run an annual report which is automated this is 5 minutes work plus a covering letter. Fees can always be negotiated ask for it to be reduced to 0.25% p.a. You can always ask the provider to remove the on going advice fee this will increase your fund value. You can alternatively pay a flat fee for investment advice once a year with any adviser. 2k is better than 10.5k bloody thieves. The advice they give you for a fund value for 1.4 million is the same as a fund value of 140,000. Good luck. 

dunstonh

The advice they give you for a fund value for 1.4 million is the same as a fund value of 140,000. 

No its not. Not even close.

fred246

You would have to advise the person with £140,000 that they needed to save more. The advice at £1.4million would be that they were doing well. So, different advice. I agree with dunstonh on this point.

DT2001

fred246 said:

You would have to advise the person with £140,000 that they needed to save more. The advice at £1.4million would be that they were doing well. So, different advice. I agree with dunstonh on this point.

 If your £140k wasn’t needed as DB and SP more than covered your ‘number’ the advice would be different if that £140k was needed to produce £6/8k p.a.
Likewise if you ‘need’ £100k p.a. then £1.4m is not enough.

I do agree with Dunstonh that the advice given will be different.

dbrookf

As we are both retiring in the next month, if we wanted to release our IFA can we just carry on with our Fund manager and their charges (apparently IFA negotiated a preferential fee)?

dunstonh

dbrookf said:

As we are both retiring in the next month, if we wanted to release our IFA can we just carry on with our Fund manager and their charges (apparently IFA negotiated a preferential fee)?

Possibly yes.  However, many IFA platforms will only transact via the IFA and not direct to client.