IFA Charges

choi

Looking to go with an IFA

£250 k investment with Novia

His fees

1.4 % Set Up Cost

Ongoing Costs

IFA Fees 1% pa

Platform and Novia 0.8*% pa

Is 1.8 % pa all in competitive

This is a fairly well established Group of IFAs

My mate has been with them for 6 years and seen his fund increase by 50% after fees

For those who remember me I am finally coming round to realising that I need to take a risk with my money in order to beat inflation

For the last free years I have been using bank accounts but have watched interest rates drop too low

Thrugelmir

choi said:

My mate has been with them for 6 years and seen his fund increase by 50% after fees

Been a period of rising markets when it's been difficult not to have achieved positive returns. Benchmark the returns against what has been achieved elsewhere. 

kuratowski

choi said:

IFA Fees 1% pa

That looks on the high side.  If you shop around, you might be able to get 0.5%.

dunstonh

Platform and Novia 0.8*% pa

Novia is the platform and it doesnt charge 0.8%.  I suspect that you have bundled the platform and fund charges together there.

IFAs normally quote their charges including TC & IC and not just OCF.  That can add a few percentage points whereas DIY investors tend to ignore the TC & IC.  Even though they exist with both.

£250 k investment 

You can probably get the IFA ongoing for around 0.5-075%.   The initial isn't bad but you can probably get it for around £2500 with shopping around.

choi

I think Novia was set at 0.15% and other charges of 0.65

Plus IFA at 1.0%

Is Novia a good investment 

Where would I find another IFA who could set me up with Novia

MX5huggy

Novia is not an investment it’s a platform that offers access to to investments and provides services to IFA’s. I wouldn’t select an IFA because they use it. That’s like choosing a restaurant because they shop at Tesco. 

JohnWinder

choi said:

My mate has been with them for 6 years and seen his fund increase by 50% after fees

How much of that increase were his personal contributions?
A 70/30 global stocks/treasury bonds fund would have increased 70% in the last 6 years, before costs, according to portfolio visualiser.

Albermarle

choi said:

I think Novia was set at 0.15% and other charges of 0.65

Plus IFA at 1.0%

Is Novia a good investment 

Where would I find another IFA who could set me up with Novia

Before looking for another IFA just try and negotiate with this one , if you think otherwise the IFA seems OK .
Just say you have been asking around and 1 % initial charge and 0.5% ongoing seem more normal ( maybe compromise on 1.2% and 0.75% ) 

choi

I already tried to negotiate on the initial set up charge

He said 2.5% was their normal rate

So 1.4 % is already discounted rate

Will see if I can negotiate on the annual ongoing rate

Thanks

choi

Update

My initial quote from the original FA has been amended

Investment sum is £250,000.00

Initial Costs for preparation of a plan 

plus any implementation costs

At 1.2%

£3,000.00

Annual Costs

IFA Cost 1.0 %
Portfolio Cost 0.72 %
Platform Cost 0.22 %

Total 1.94 %

He is a Chartered Financial Planner in a largish company

Is it worth paying more for his services

As there is cover should he leave the company

I had another quote from a Chartered Financial Planner in a smaller  IFA company consisting of two other IFAs

Initial Costs for preparation of a plan 

plus any implementation costs

At 1.0%

£2,500.00

Annual Costs

IFA Cost 0.5 %
Portfolio Cost 0.72 %
Platform Cost 0.22 %

Total 1.44 %

He is a Chartered Financial Planner in a much smaller company

He says he will be retiring in less than six years

I am concerned at what happens to my investment when he leaves

Is the saving worth the risk of having to start all over again

I also want an Ethical  Investment Plan

The first Financial Advisor says they do not do an income portfolio for my level of risk

The second Financial Advisor says he can set up an ethical portfolio which will meet my needs

Do ethical Investments  generally produce lower returns

I have a third option

I received a quote from another small independent team of IFAs based on an investment  of £350,000.00

Initial Costs for preparation of a plan 

plus any implementation costs

At 1.0%

£3,500.00

Annual Costs

IFA Cost 0.8 %
Fund Cost 0.12 %
Platform Cost 0.3 %
DFM Cost 0.3%
Transaction Cost Typically 0.04%

They also provided costs for ethical Investments

They advised that they could cost approximately 0.65% more than standard investments because these portfolios contain more active funds and due to the level of stewardship to ensure companies are doing what they say they do, the fund charges are slightly higher.

This IFA is not chartered

Would this IFA be a better option

 

 

 

dunstonh

Do ethical Investments  generally produce lower returns

Historically yes. However, in recent years, the gap has been closing and we have been seeing the lower risk portfolios have a few years of outperformance over conventional.   Probably as lower risk portfolios tend to be high in neutral investments like gilts leaving a much smaller equity ratio.

IFAs that use DFMs are outsourcing the whole investment process to a third party.  You are paying for that DFM.  So, the value of the IFA is reduced.  Effectively focusing more on your planning side.  However, if you have limited planning needs and a DFM is being used then the IFA has very little to do.

For £250k chartered is overkill.   So, don't specifically aim for a chartered planner.  

You have to use your instinct.  You have spoken with these.  We haven't.   Have a think about what was said and how it was presented.   You don't want a friend.  You want someone who informs you and tells you how it is.   I would value longevity.  It makes the whole thing a lot easier for all concerned the more that time goes on.  Dealing with the same person for 20-30-40 years rather than having an adviser change every 1-5 years is not ideal.