IFA Fees....

ChainsawCharlie

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Diplodicus

Tell him to sharpen his pencil. 

You don't need an adviser but, if you want one to hold your hand, you should shop around.

tebbins

What is your current provider, what is the pot invested in currently, why do you think there are better funds elsewhere (given you admit you don't know), what is wrong with your current funds/fund selection?

dunstonh

Your pot is not small but in IFA terms, its not particularly big either.  So, its not a surprise to see 1% quoted for that sort of value.

Ideally, you shouldnt want to exceed 2% p.a. at all.  And ideally, be no more than 1.5%.  However, be wary that DIY investors will use different charges disclosures than IFAs.  IFAs include TC (Transaction Charges) and IC/Other (incidental charges) in their disclosures.    DIY investors tend to ignore them.   

For the initial fee, many IFAs will taper their charge based on the value.  Or they will have a cap and collar.   In monetary terms, this one is quoting £4950.  That is high.   The target should be around £2500.

% to fund managers to manage the funds per annum  i think that 1% fund managers cost includes a 0.3% new provider product charge.

That is high.  Even if you go with 100% active funds, most of those are around the 0.7% mark nowadays.  Niche/higher risk funds can go above 1% but when you average out a portfolio of funds, you tend to be much lower than 1%.  Maybe they are including a DFM cost in there.  That is often around 0.3% on top of the fund charge.

Diplodicus

My £172, 000 has made just £1500 in 12 months invested in the aviva diversified assets fund 2 s6  so not even meeting inflation. Considering the investment climate over ther last twelve months, that is a bad return. 

But what you will notice, CC, is that none of the the 3 IFAs nor the next 3 IFAs you talk to will risk anything on providing a better return.

Take control. Investing is not rocket science. All else being equal, you will end up richer without a financial adviser. But, even if you don't, you will be happier being poorer by your own than someone else's agency.

Diplodicus

ChainsawCharlie said:

Diplodicus said:

My £172, 000 has made just £1500 in 12 months invested in the aviva diversified assets fund 2 s6  so not even meeting inflation. Considering the investment climate over ther last twelve months, that is a bad return. 

But what you will notice, CC, is that none of the the 3 IFAs nor the next 3 IFAs you talk to will risk anything on providing a better return.

Take control. Investing is not rocket science. All else being equal, you will end up richer without a financial adviser. But, even if you don't, you will be happier being poorer by your own than someone else's agency.

Thanks for your input  but I would really prefer to have my pension looked after by an IFA rather than go it alone :-)

Why? 

You realise that your IFA would give no undertaking to do better than an investor throwing darts at a dartboard?

Investing really is not rocket science and the attachment of a financial adviser won't improve your chances. 
If you take charge of your investment, your likely outcome is neither better nor worse but you will feel better if you take charge of your fortune.

dunstonh

Hi with Aviva pension, has 200 funds i can chose from, most are based around gilts and bonds.I don't really know enough about investing to know which fund is best  hence seeking an ifa.

Aviva offers retention deals via IFAs to move legacy pensions onto their whole of market platform.   It's not the best platform on the market but its not the worst and retention deals on circa 180k will usually be very good.

When I talk with Ifa's 3 up to now all have criticised the funds Aviva are offering me as part of this pension plan. Saying they don't offer much.

The old Aviva Life & Pension products are from a different era.  200 pension funds was good in its day but these are out-of-date products and unless there is some contractual reason or feature that makes it attractive to stay, then it is usually worth moving on.

Looking at the reports for all of the aviva funds available, none are performing well.

I suspect that is unlikely as the usual external funds are available on their pension and some of those would have done very well.

My £172, 000 has made just £1500 in 12 months invested in the aviva diversified assets fund 2 s6  so not even meeting inflation

It woudlnt do much.  That is not down to the pension but the fact you have invested defensively and gone for an option that is not much higher risk than cash.

You realise that your IFA would give no undertaking to do better than an investor throwing darts at a dartboard?

It would be stupid to offer such an undertaking as much as it would be as stupid to select funds that way.

Investing really is not rocket science and the attachment of a financial adviser won't improve your chances. 

An attachment of an IFA some years back would have improved things significantly compared to the current position.  

If you take charge of your investment, your likely outcome is neither better nor worse but you will feel better if you take charge of your fortune.

If you DIY well and it can be fine. DIY badly and it can be a costly mistake.    You cannot assume that everyone that does DIY will do it better.  

poppy10_2

Most IFAs are charlatans. Will charge you huge fees for putting your money in underperforming assets. Just stick your pension in a global index tracker and forget about it till you retire. It will grow much more than the average spiv IFA will achieve

JohnWinder

1% ongoing advice charge with 2 meetings to discuss per annum

I'd question the six monthly meetings. Without those, the advisor could mail you a yearly or six monthly report summarising your affairs, or I imagine with some providers you could log in to your pension investments account daily and see what's happening. Either way, you'd need to contact your advisor, if you had one, to inform them of changes in your personal circumstances that were so significant that your pension management needed adjusting. Is that really going to happen to you every six months?

I'd say there would be gross inefficiencies in setting up regular six monthly meetings which would seem unnecessary. Is that how this advisor runs their business, inefficiently?

But worse than that, if you have no great interest in money management, do you really want to be required to meet six monthly? It would be like having to see your bank manager six monthly for no reason. You're in retirement, you don't want unnecessary obligations burdening your time. Or maybe you need the social contact.

Of course you could cancel the meetings. Does the fee drop? Sounds like a padded out service at your expense.

Ibrahim5

IFAs are just thieves. It's about time that people who use them start dictating the fees that they will pay. Until that happens the IFAs will continue to plunder. It's only a few minutes work from someone with very few skills.

JohnWinder

I have no idea if 1% fee should be lowered and meetings made less frequent; individual circumstances might justify something which a throwaway generalisation doesn't apply to. I simply question a model that makes six monthly meetings routine.

But a financial retirement strategy that might last 25 years surely will need some reviewing, even if it's ad hoc and occurs only every 5-10 years, whomever does the reviewing, unless it's only a lifetime annuity or similar pension.