Do I need a financial advisor?

NeilC1965

isplumm said:

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

My pot has risen above what was there before the crash last year by some margin. Non of that was down to the IFA , but the DFM , who looks like he has earned his % fee .

When I start taking money from the pension , administer transactions and minimise tax etc etc, then that's when my IFA will earn his % . Its still a minimal amount of work from what I can see though for 0.5% pa!

IvanOpinion

isplumm said:

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

I think that is a case of 'correlation does not imply causation'.  My investments rose by significantly more and there was no IFA involved - following your logic that demonstrates your IFA has performed poorly, however I don't suggest that is the case. 

It all depends on what investments you have purchased - rises/falls are down to the fund managers and many other factors including perception, political, environmental etc. etc.

Linton

NeilC1965 said:

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.

Not true.  Good investing does not mean getting the maximum return but rather it means getting you the return you need at the time you need it with the minimum likelihood of failing.  The DFM does not know you, your objectives, your circumstances and your ability to handle risk.  The role of the IFA is to develop an appropriate strategy.  The details of which investments are bought and sold and when to implement that strategy is a secondary matter.

NeilC1965

Linton said:

NeilC1965 said:

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.

Not true.  Good investing does not mean getting the maximum return but rather it means getting you the return you need at the time you need it with the minimum likelihood of failing.  The DFM does not know you, your objectives, your circumstances and your ability to handle risk.  The role of the IFA is to develop an appropriate strategy.  The details of which investments are bought and sold and when to implement that strategy is a secondary matter.

But my IFA doesn't need to do anything for 5 years before we can start having his type of discussion again, hence my original question!!!

Ive already got enough money to retire at 55 with my financial requirements.My IFA has told me that already after a fairly extensive review of my finances and rather large fee for a CETV and pension consolidation. One can only assume my financial situation will improve at 60 before I need to access my funds.

cfw1994

NeilC1965 said:

Linton said:

NeilC1965 said:

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.

Not true.  Good investing does not mean getting the maximum return but rather it means getting you the return you need at the time you need it with the minimum likelihood of failing.  The DFM does not know you, your objectives, your circumstances and your ability to handle risk.  The role of the IFA is to develop an appropriate strategy.  The details of which investments are bought and sold and when to implement that strategy is a secondary matter.

But my IFA doesn't need to do anything for 5 years before we can start having his type of discussion again, hence my original question!!!

Ive already got enough money to retire at 55 with my financial requirements.My IFA has told me that already after a fairly extensive review of my finances and rather large fee for a CETV and pension consolidation. One can only assume my financial situation will improve at 60 before I need to access my funds.

Ahhh, falling into the trap of thinking you can just pick and chose the times for interacting with your IFA 
That old question about "what are they doing for their %?"   

If you are *happy* with the IFA (& the fact you speak as though you would like to re-engage in 5 years suggests to me you are), then why not speak with them?
They may be happy to drop your paperwork & pick it up again in 5 years.   
Although I suspect the cost to do the latter might turn out to exceed the 0.5% annual payments - you would effectively be a "new client" to them - have you considered that?

If you begrudge the (perceived) little work they do for the interim 0.5%....then research things, & DIY.

Or I guess you could check if the provider and DFM (the other 1.3% cost you described) will continue without an advisor....& when you feel you need an advisor again, go through the rigmarole of finding one.

Many DIYers find their costs are well below 1%, perhaps 0.5% for some.   Something to consider.

dunstonh

Many DIYers find their costs are well below 1%, perhaps 0.5% for some.   Something to consider.

Many IFA clients find themselves at 1% or under as well including the 0.5% adviser charge.       

Maybe an option here is to ask the IFA to offer a cheaper investment strategy. 

cfw1994

dunstonh said:

Many DIYers find their costs are well below 1%, perhaps 0.5% for some.   Something to consider.

Many IFA clients find themselves at 1% or under as well including the 0.5% adviser charge.       

Maybe an option here is to ask the IFA to offer a cheaper investment strategy. 

Indeed.   

Feels like 1.8%pa is in the territory of being rather ripped off: that is almost 2% wiped out of any gains for the pot, which is a LOT!
Of course, if they have been providing gains north of 8-10% year on year, maybe that is perfectly fine.....

dunstonh

cfw1994 said:

dunstonh said:

Many DIYers find their costs are well below 1%, perhaps 0.5% for some.   Something to consider.

Many IFA clients find themselves at 1% or under as well including the 0.5% adviser charge.       

Maybe an option here is to ask the IFA to offer a cheaper investment strategy. 

Indeed.   

Feels like 1.8%pa is in the territory of being rather ripped off: that is almost 2% wiped out of any gains for the pot, which is a LOT!
Of course, if they have been providing gains north of 8-10% year on year, maybe that is perfectly fine.....

DFMs cost more.  So, some of that 1.8% will be the DFM charge.    So, moving from DFM to advisory would remove the DFM charge.   That would account for probably around 0.3-0.5% ballpark.   The adviser charge is 0.5% and the platform charge is probably 0.2% or under seeing as the OP is talking about a £1million fund.  That puts the fund charges around 0.8%.

IFAs and platforms are required to disclose charges including TC & IC, not just OCF only.  We dont know if the OP is including TC & IC in the 1.8% or not.  However, lets assume he is (as that is how most advised clients look at their charges).   TC & IC is probably around another 0.1%.  That makes the OCF around 0.7%.   That suggests the portfolio is managed funds only (or no significant weighting towards passives).    So, there is an option to move towards a hybrid portfolio option (mixture of active and passive).

So, there is plenty of scope to make adjustments.

Noting that the OP says it is a £1m fund (says IFA charge is 0.5% and its £5k a year = £1m fund).   I am surprised that there would be no advice events in the next 5 years as a £1m fund is so close to the LTA and you would expect some LTA avoidance management.