IFA Fees....

csgohan4

Ibrahim5 said:

I don't really want to go through it all again. I am just a great observer of people and behaviours. You only have to read this thread. I have got a pension I want transferring and looking after. The important part of a pension can easily be looked at on one side of A4 paper. There will be pages of waffle but the IFA won't read that. To give advice they will have to ask a few standard questions. Transferring a pension is done online in a few minutes. £5K for that? It's a joke. An annual review should be a few seconds glancing at the investments. £1820 for that! They really are spivs. They only do anything that provides silly money. Say you are 25 years old, earn £30K and want to start a pension. You should be able to go to an IFA and they set it up for less than £200. It's only a few questions and a few forms to fill in. They won't go near anything like that. Commission used to be a massive racket that they were involved in. The regulators have reduced most of the scams they were involved in. Now the scam is just silly fees. They are TOTALLY out of proportion to the service provided.

I don't see how the resident IFA on this thread is promoting themselves and asking you to PM him for business

Say you want to a plumber to change your kitchen tap, charges you about 100 pounds, would you say that is expensive? or would you rather do it yourself and botch things?

Everything is relative. I get charged 250+ for a car service, thats expensive, but could you do it yourself??

As a newbie investor who can't tell your Funds from, IT's to ETF's would you think they should just go all in on the top Morning star YOLO? or reasonable to seek professional help

These fees you are speaking of are relative as well, there will be terms of engagement and you can and should shop around, you would be silly not. depends what the 5k fees are for how big a pot. if its 500k+, perhaps reasonable. nothing stopping you going elsewhere is it? DO you get the first quote you get? If you do then thats on you

If you have less capital say under 30k, of course some IFA's won't want your business. It's like getting a plumber for a job to fix your toilet flusher, comes and either quotes you high prices or doesn't get back to you, because it's not worth the time. Their not all obliged to give you their service, just as you don't need to take theirs. That's business and you appear to be bitter about it. 

If you want  service in a heavily regulated industry, then I'm afraid I got bad news for you, you got to pay for it. Who pays for the compliance, staffing, training e.t.c costs?

If your happy to DIY invest then nothing wrong with that, but there's nothing wrong with a newbie who does not research or doesn't want to, to seek professional help. Time is money for some people.

Glancing at investments for your annual review takes a few seconds you say? what looking at Profit and loss only? No research on the coming world events, the global reaction to China, current market trends, IPO's, overheated US market? precious metals, sustainable, energy e.t.c? All take time to research. You read the FT? have a subscription? have access to other paid financial info? DO you read the FT in a few seconds?

you oversimplify things because you haven't had an IFA nor researched in more depth your own investments perhaps?

Just because you don't want to pay for something, doesn't mean someone else shouldn't, Everyone is different and to get paid professional advice is better than closing your eyes and picking a random fund and hope for the best. 

As I said in my prev posts, there's more than just getting a passive index tracker, do you know how many there are and which platform to use e.t.c?

Sounds like you like the race to the bottom of the prices, but be careful what you wish for, you get what you pay for.

We get that that your stingy and don't want to spend much on regulated paid advice for helping you to choose from thousands of funds to help you get rich quick, but no need to get bitter against people that do so and don't have the time to do more research than you do, although from your post, it doesn't seem to be adequate. An annual review of your investments does not take seconds if you truly care about investing.  

Have a read of the Monevator passive portfolio and their quarterly reviews are certainly not seconds. Rebalancing, rationales, Current events e.t.c

Diplodicus

ChainsawCharlie said:

Since making my opening post, I have dropped the IFA who quoted me £5000 for initial setup, and have found a very knowledgeable chartered IFA who has agreed to charge me his adhoc  charge which is a fifth of that £5000, he will setup my sipp according to my attitude to risk.  A fund manager will then manage this for around 0.7%, and I then have opportunity to go for 1% ongoing with my ifa or another adhoc charge for as and when advice/review.

Excellent. A far more reasonable charge. 
Just be wary of ongoing fees, ChainsawCharlie. Give your new portfolio time to prove its worth.

The FCA has also raised concerns about ongoing financial adviser fees leeching the value of investments:

https://citywire.co.uk/new-model-adviser/news/fca-concerned-consumers-are-paying-for-ongoing-advice-they-don-t-need/a1434136

csgohan4

ChainsawCharlie said:

Since making my opening post, I have dropped the IFA who quoted me £5000 for initial setup, and have found a very knowledgeable chartered IFA who has agreed to charge me his adhoc  charge which is a fith of that £5000, he will setup my sipp according to my attitude to risk.  A fund manager will then manage this for around 0.7%, and I then have opportunity to go for 1% ongoing with my ifa or another adhoc charge for as and when advice/review.

I have listened to everyone's constructive input, and certainly appreciate the comprehensive well thought info the IFA's on here have offered. 

So why am I going for an IFA?
Simple answer is, After enjoying my 1st year of retirement I am spending too much time wondering if I have chosen the right funds within my private pension, because of my lack of confidence in this area I am glued each day to the stock markets which have proven to be an excellent indicator of what to expect when I then check my pension pot to see of I have gained or lost, some will say why check daily?

 My answer is because I still don't know if the funds I have chosen are right.

So I have chosen an IFA because I want to stop doing this and enjoy my retirement instead of constantly wondering if what I have done is correct.  OK some of you may say but how do you know the ifa has done the right thing.......well my answer to that is I dont, but he will have a much better handle on this than I would.

Well done on finding something you want and are happy with. There is nothing wrong choosing an IFA or going DIY, both have pros and cons. Sadly some on here seem bitter about those who pay for advice and seem to know it all and have the edge and adamant you shouldn't. 

Least now you can sleep better at night. Sadly I have to watch my investments everyday to keep an on eye on things. Something of a down side as a DIY investor, but then I'm also in risky shares as well and that's on me.

But one man's meat is another man's poison

Good luck and enjoy retirement

Albermarle

 A fund manager will then manage this for around 0.7%,

Do you mean that within the SIPP you will have just one managed fund that costs 0.7% pa ? + SIPP platform costs?

Or do you mean that someone will manage your investments overall. So 0.7% for them + the fund costs + the SIPP costs.

Option 1) is already at the higher end for charges and Option 2) would definitely be tops.

If you later added an IFA 1% ongoing fee, then your overall fees could heavily affect your returns.

It is not just IFA or no IFA , the overall cost of everything is what is most important.

Langtang

Ibrahim5 said:

I think it's important for balance. The forum has resident IFAs who will always tell you how marvellous they all are. It's hilarious how they all have to thank the same posts. Many people have had poor experiences with IFAs and don't think too highly of them. They should have an opportunity to voice their opinions. If people hadn't been treated so badly they wouldn't hold the opinions that they now do.

I cannot guarantee that I’ve read every post by the people that I know are IFAs, nor do I profess to know all those that are IFAs. But never have I heard any of those IFAs tell anyone “how marvellous they are” Never. I have heard them fight their corner with people who are anti IFAs, but anyone in any profession would do the same. 

I think I may change my bootstrap to “if I’ve told you once, I’ve told you a million times. Don’t exaggerate”

Diplodicus

ChainsawCharlie said:

Albermarle said:

 A fund manager will then manage this for around 0.7%,

Do you mean that within the SIPP you will have just one managed fund that costs 0.7% pa ? + SIPP platform costs?

Or do you mean that someone will manage your investments overall. So 0.7% for them + the fund costs + the SIPP costs.

Option 1) is already at the higher end for charges and Option 2) would definitely be tops.

If you later added an IFA 1% ongoing fee, then your overall fees could heavily affect your returns.

It is not just IFA or no IFA , the overall cost of everything is what is most important.

I will probably not go for 1% ongoing but will opt for adhoc which is half the cost of ongoing.

I recommend that, rather than carry ongoing adviser fees. Your pay your fund manager to worry about performance, your financial adviser you would pay an ongoing fee to manage your expectations. 

I believe this thread highlights a basic problem with the subject of the thread. £5,000, £2,500 (dunstonh's suggestion) or £1,000? Almost impossible to quantify the value of IFA fees because, unlike a plumber, a car mechanic or a surgeon, the IFA gives no undertaking to improve the position of his client/patient 

Diplodicus

Good luck CC. You are making a right choice in not signing up for ongoing fees. Apart from the cost, you would be fostering a dependency on your adviser service. Possibly a lifetime dependency.
Good work finessing a £5,000 fee down to £1,000. To put that in context: energy prices are set to rise by up to £800 per household. You have just saved six years energy price rises. You have earned a drink.

csgohan4

ChainsawCharlie said:

Heres how this layman (Me) trying to do this the "easy way" using the funds available to me via my existing Aviva.

Searched for a fund risk rating 3

Found a fund which is performing well in line with the abi graph.

Looked for the best fund which won't attract a further percentage cost.

Found Aviva Mixed investment (20-60% shares)

Performing far better than my current fund aviva diversified assets fund 2 S6.

So will probably phone Aviva on Monday, switch to that fund and see what happens, I do realise it needs time, but from what I can see its a slightly higher risk but performance is way above the one I'm in now.

Changing to headliners may also be counter productive. Today's winners maybe tomorrow's Losers.

As you have an IFA suggest picking their brains, otherwise having an investment strategy in mind and sticking to it, rather than the flavour of the month is reasonable. 

A few months ago it was Tesla, now look where they are now

Rollinghome

csgohan4 said:

A few months ago it was Tesla, now look where they are now

Up 84% YTD it seems.  How disappointing.

But the thrust of what you are saying is right,  the best performing investments over the past 5 years are unlikely to be the best performers over the following 5 years. "Past performance is not a guide to future performance." and all that.

csgohan4

Rollinghome said:

csgohan4 said:

A few months ago it was Tesla, now look where they are now

Up 84% YTD it seems.  How disappointing.

But the thrust of what you are saying is right,  the best performing investments over the past 5 years are unlikely to be the best performers over the following 5 years. "Past performance is not a guide to future performance." and all that.

Point was they dropped over 35% from their height and if you invested at their height, you would still be in the red. 

How about if you look at china funds, BG China fund have gone down significantly for example

Baillie Gifford China (Class Accumulation Performance Charts & Tables (hl.co.uk)