financial advisers charges

cisko65

Hi
I would like to compare the charges for financial advice (independent and non-independent advisers). I think I have to consider:
-an initial charge
-ongoing charges for annual review
-discretionary fund management

Anything else? It would be helpful to find some comparisons already done, or at least how much can be consider ok charges and very high, and the type of advice provided.

For ex. I've compared Fintuity with Hargreaves Lansdown (although I don't know if their roles can be compared...) websites.

Fintuity online independent adviser

-Lump sum Investment/Transfer

Full investment planning (including review of existing planning and accounts) 1.5%

(fees applied to all contributions made to the recommended plans over the first 12 months)

-Charge per annum on any amount 0.5% (monetary charges will increase as the value of investment funds increases)

-Discretionary Fund Management 0.5% plus VAT of any funds invested per annum

Hargreaves Lansdown

-financial planning charges

Portfolio advised upon up to £200,000 2%

-investment advice charges

Portfolio advised upon up to £1,000,000 1%

-Ongoing support of a financial adviser and annual reviews 0,365 % per year on the portfolio advised upon (VAT is charged in addition where applicable)

Many many thanks.

dunstonh

I would like to compare the charges for financial advice (independent and non-independent advisers). I think I have to consider:
-an initial charge
-ongoing charges for annual review
-discretionary fund management

They are the main ones.  Although you should eliminate FAs full stop.     Some firms also overuse DFM services.  It is an extra layer of cost and can be viable in some cases but not all.    

For ex. I've compared Fintuity with Hargreaves Lansdown (although I don't know if their roles can be compared...) websites.

Fintuity are an IFA.  HL is an FA that uses its own platform

-Discretionary Fund Management 0.5% plus VAT of any funds invested per annum

VAT should no longer be charged on DFM services.  Most have pulled the VAT but there are still some stragglers that haven't.    
Personally, I think 0.50% pa for the DFM is too expensive.   Although I am not a fan of using a DFM to begin with.    A DFM makes an IFA's job easier.   If the IFA reduces their charges to reflect that, then fair enough.   However, if a discetionary IFA is charging the same as an advisory IFA then you are not getting as much value for money from it.

Albermarle

Do not forget that platform and fund charges are on top .

Probably better to find a local IFA who you can actually meet face to face ( Covid allowing ) and build up a relationship with , rather than purely on line offerings . The costs would be in the same ball park .

JohnWinder

dunstonh said:

  Although you should eliminate FAs full stop.    

Just to note the conflict of interest here.

IanManc

JohnWinder said:

dunstonh said:

  Although you should eliminate FAs full stop.    

Just to note the conflict of interest here.

Do you actually disagree with what Dunstonh has said here, in which case I would be interested to hear the reasons why, or are you just gratuitously doubting his motives?

dunstonh

JohnWinder said:

dunstonh said:

  Although you should eliminate FAs full stop.    

Just to note the conflict of interest here.

Being independent means you don't have any conflict of interest.  Unlike being an FA where you do.

cisko65

dunstonh said:

I would like to compare the charges for financial advice (independent and non-independent advisers). I think I have to consider:
-an initial charge
-ongoing charges for annual review
-discretionary fund management

They are the main ones.  Although you should eliminate FAs full stop.     Some firms also overuse DFM services.  It is an extra layer of cost and can be viable in some cases but not all.    

For ex. I've compared Fintuity with Hargreaves Lansdown (although I don't know if their roles can be compared...) websites.

Fintuity are an IFA.  HL is an FA that uses its own product and funds.

-Discretionary Fund Management 0.5% plus VAT of any funds invested per annum

VAT should no longer be charged on DFM services.  Most have pulled the VAT but there are still some stragglers that haven't.    
Personally, I think 0.50% pa for the DFM is too expensive.   Although I am not a fan of using a DFM to begin with.    A DFM makes an IFA's job easier.   If the IFA reduces their charges to reflect that, then fair enough.   However, if a discetionary IFA is charging the same as an advisory IFA then you are not getting as much value for money from it.

Good to know that the listed charges are the main ones to consider and compare. And good to have your view on FAs. Thanks. 

cisko65

Albermarle said:

Do not forget that platform and fund charges are on top .

Probably better to find a local IFA who you can actually meet face to face ( Covid allowing ) and build up a relationship with , rather than purely on line offerings . The costs would be in the same ball park .

Not sure what platform and fund charges are? Sorry

I'll talk to an online IFA next week (Fintuity). Last week, a zoom face-to-face with the Client Relationship Manager felt fine.

Albermarle

cisko65 said:

Albermarle said:

Do not forget that platform and fund charges are on top .

Probably better to find a local IFA who you can actually meet face to face ( Covid allowing ) and build up a relationship with , rather than purely on line offerings . The costs would be in the same ball park .

Not sure what platform and fund charges are? Sorry

I'll talk to an online IFA next week (Fintuity). Last week, a zoom face-to-face with the Client Relationship Manager felt fine.

All the charges you listed are for managing/advising on your investments .

But the investments themselves will have a cost /% charge per year . This can vary widely from 0.1 % to 1.5%
Then you need somewhere to buy and hold the investments . This is called an investment platform and they charge as well . From 0.1% to 0.45 % approx .

If you did it all yourself then you would still have to pay the investments and platform charges but obviously not all the financial advice /DFM charges .

cisko65

Albermarle said:

cisko65 said:

Albermarle said:

Do not forget that platform and fund charges are on top .

Probably better to find a local IFA who you can actually meet face to face ( Covid allowing ) and build up a relationship with , rather than purely on line offerings . The costs would be in the same ball park .

Not sure what platform and fund charges are? Sorry

I'll talk to an online IFA next week (Fintuity). Last week, a zoom face-to-face with the Client Relationship Manager felt fine.

All the charges you listed are for managing/advising on your investments .

But the investments themselves will have a cost /% charge per year . This can vary widely from 0.1 % to 1.5%
Then you need somewhere to buy and hold the investments . This is called an investment platform and they charge as well . From 0.1% to 0.45 % approx .

If you did it all yourself then you would still have to pay the investments and platform charges but obviously not all the financial advice /DFM charges .

Thanks indeed for all this information. I realise I am still unaware of how the investment world works. Therefore making decisions on what to do and how is beyond my capability. Even with the help of an independent financial adviser. Now I must find a better solution, maybe just opening a saving account.

JohnWinder

IanManc said:

Do you actually disagree with what Dunstonh has said here, in which case I would be interested to hear the reasons why, or are you just gratuitously doubting his motives?

Thanks for taking this up. To start, the original question was: what other charges should I look for when comparing fees for financial advice. It wasn’t should I use FA's or IFA's.

Secondly, the unsolicited statement to avoid FA’s was put without any consideration or even mention of the arguments in favour of a particular choice; that seemed less than ideal for someone clearly feeling their way in this area. I thought more basis ought to have been provided for such a direction, and noted as I did. 

I don’t know about choosing one or the other sufficiently to offer assistance, I’m sorry. And I don’t think I’m the one to decide if my comment was gratuitous in the unjust sense; it was given freely.

In all the senses that IFA’s are independent, such as not being obliged to use particular services or products that might not suit their clients, I can see that they don’t have a conflict of interest. In the sense that they compete with FA’s for clients and belong to different professional bodies, I would imagine they could have a conflict of interest in telling someone to not use a FA. Perhaps that's a fine distinction not readily appreciated; or is there no conflict of interest in a IFA telling someone not to use a FA?

Perhaps mindful of the issue, we do have the declaration in the footer of each post as a clear disclosure alerting readers to potential conflicts of interest. I hope that makes the issue clearer.