Do I need a financial advisor?

NeilC1965

I have my pension all set up and ready to access when I reach 55 as a drawdown pension. It has three fees associated with it:- IFA , Platform and Funds which add up to around 1.8% pa of the fund value. Due to a change  of circumstances, I will no longer need to drawdown a pension for around a further 5-6 years, obviously leaving the fund invested. I would obviously need to still pay the platform and the Fund fees (I have no desire to decide my own investment strategy and execute as I have no interest in this , no experience and although mentally capable at the moment , may struggle in later years) , but not entirely sure what my IFA does in the following 5 years to earn his 0.5% or so. Am I tied in with the IFA to access the platform and is this normal ? It is a very easy £5k for  the IFA and for very little input from themselves.

dunstonh

Do I need a financial advisor?

In most cases, no-one does if they know what they are doing.

I have no desire to decide my own investment strategy and execute as I have no interest in this , no experience and although mentally capable at the moment , may struggle in later years) , but not entirely sure what my IFA does in the following 5 years to earn his 0.5% or so. 

Someone has to control the investment strategy.    Either you or the IFA or you use investments that do it for you (which may or may not be better than what the IFA has put in place).

Am I tied in with the IFA to access the platform and is this normal ? 

Most IFA platforms do not facilitate DIY investors and need transactions to be handled via the IFA.  Some will allow limited transactions to be done by you.

It is a very easy £5k for  the IFA and for very little input from themselves.

How do you know?     If the IFA is farming out investments to a DFM our using a multi-asset fund then you are right.  However, if the IFA is controlling the investment strategy then you are wrong and the workload and costs are far greater.      

TVAS

Do you get an annual face to face (zoom to zoom meeting?). Does his send you newsletters/bulletins. If you are not happy with the service you can write to the provider and ask them to remove the 0.5% IFA fee. If you are not satisfied that he has not done annual work in the past to justify the 0.5% fee you can complain to him and ask for the charges to be refunded. If he says no take it to FOS.

dunstonh

If you are not happy with the service you can write to the provider and ask them to remove the 0.5% IFA fee.

You have said this before and I have corrected you but you are repeating it.  You should contact the IFA to remove the fee.  The method of payment does not end the contract.  It just means the IFA can bill directly.   The IFA needs to be contacted.  Not the provider.    

It is only on commission based plans where your method works.  Although if it's commission rather than a fee, that negates your next comment on asking for a refund.

MaxiRobriguez

I find it odd that you say you have no interest in executing your financial strategy and then two lines later question the price of an IFA.

Imagine if someone said that about your work? "I have no idea what you do 9-5 but it seems to me you are overpaid!"

Albermarle

As above , if you want to manage your own investments , then you need to spend some time learning how to do it .
If you are not interested then best to let someone else do it .

NeilC1965

dunstonh said:

Do I need a financial advisor?

In most cases, no-one does if they know what they are doing.

I have no desire to decide my own investment strategy and execute as I have no interest in this , no experience and although mentally capable at the moment , may struggle in later years) , but not entirely sure what my IFA does in the following 5 years to earn his 0.5% or so. 

Someone has to control the investment strategy.    Either you or the IFA or you use investments that do it for you (which may or may not be better than what the IFA has put in place).

Am I tied in with the IFA to access the platform and is this normal ? 

Most IFA platforms do not facilitate DIY investors and need transactions to be handled via the IFA.  Some will allow limited transactions to be done by you.

It is a very easy £5k for  the IFA and for very little input from themselves.

How do you know?     If the IFA is farming out investments to a DFM our using a multi-asset fund then you are right.  However, if the IFA is controlling the investment strategy then you are wrong and the workload and costs are far greater.      

There is a DFM at the platform, not at the IFA. By 'investment strategy' , perhaps 'investment decisions' would be a more accurate description. i.e where and how much to invest. Not my area of expertise.

NeilC1965

MaxiRobriguez said:

I find it odd that you say you have no interest in executing your financial strategy and then two lines later question the price of an IFA.

Imagine if someone said that about your work? "I have no idea what you do 9-5 but it seems to me you are overpaid!"

There is a DFM at the platform making all of the investment decisions, not at the IFA.

NeilC1965

MaxiRobriguez said:

I find it odd that you say you have no interest in executing your financial strategy and then two lines later question the price of an IFA.

Imagine if someone said that about your work? "I have no idea what you do 9-5 but it seems to me you are overpaid!"

My financial strategy is invest in stocks/shares bonds and cash. The detail within is left to the DFM who is not the IFA.

dunstonh

NeilC1965 said:

dunstonh said:

Do I need a financial advisor?

In most cases, no-one does if they know what they are doing.

I have no desire to decide my own investment strategy and execute as I have no interest in this , no experience and although mentally capable at the moment , may struggle in later years) , but not entirely sure what my IFA does in the following 5 years to earn his 0.5% or so. 

Someone has to control the investment strategy.    Either you or the IFA or you use investments that do it for you (which may or may not be better than what the IFA has put in place).

Am I tied in with the IFA to access the platform and is this normal ? 

Most IFA platforms do not facilitate DIY investors and need transactions to be handled via the IFA.  Some will allow limited transactions to be done by you.

It is a very easy £5k for  the IFA and for very little input from themselves.

How do you know?     If the IFA is farming out investments to a DFM our using a multi-asset fund then you are right.  However, if the IFA is controlling the investment strategy then you are wrong and the workload and costs are far greater.      

There is a DFM at the platform, not at the IFA. By 'investment strategy' , perhaps 'investment decisions' would be a more accurate description. i.e where and how much to invest. Not my area of expertise.

Basically, an IFA has a choice to control the investment selection on an advisory basis or pass it to a DFM to do it.     Doing it on an advisory basis is more expensive as the IFA has to buy the research, due diligence, actuarial data etc.   It also creates more work as the IFA has to do the transactions.     The IFA is effectively the facilitator for everything.      Whereas where a DFM is used, they do all that.  It reduces the IFA workload significantly.   Some DFMs require an IFA or FA to be used for certain tasks but if you have no advice related tasks and are with a DFM, then the adviser becomes unnecessary.

isplumm

I have to say that if you get a decent IFA, they are worth their weight in gold.

My pension pot rose nearly 12% last year - during the pandemic - so I don't begrudge him his fee!

Mark