IFA Fees....

Diplodicus

Linton said:

So many mistakes in so few lines.

Sorry for the late reply. I did look in yesterday but the day was so beautiful, it quickly won out. Plus, I did rather overstep the boundary of amiable discussion the night before and some of what you state I do agree with, as below:
  
 - And no the expectation wasn't that one would steadily deplete one's pot to nothing during retirement.  Drawdown of any form only became possible in the 1990s and was highly restricted so as to be unsuitable for most people.  It only became mainstream in 2015. When I retired the assumption would be that one would buy an annuity, which was fine because annuity rates were much more favourable than now.

Agreed, the assumptions around pensions were completely different when we were half our ages. Most people thought of their company pensions in the same way as their state pensions - completely out of their hands. The expectation was that *someone else* would manage their retirement journey finance and -at its end, whenever that came - there would be nothing left to hand on. Fast forward to now, and pensions have become for many people their single most valuable asset, and a suitable vehicle for passing on wealth down generations. The decumulation glidepath - which still is seemingly the common strategy  - doesn't necessarily help that aim. I probably didn't make my point clear.
Ongoing Financial Adviser fees are a concern to the Financial Conduct Authority:
https://citywire.co.uk/wealth-manager/news/fca-to-clamp-down-on-expensive-and-conflicted-ongoing-advice-fees/a1254558
If there are to be a mountain of claims falling on the heads of the financial advice business, it won't come from insistent clients but rather those blessed with a long life who signed up for the journey with financial advisers attached, in my opinion.



Early retirement means the freedom to do whatever you want, provided you have saved sufficient money.

Absolutely agree, and that includes the freedom to become part of the furniture on a moneysaving site, Linton.
People have different passions. 

You clearly have little experience of the world if you think retirement means the rocking chair. 

Easy single declined.

 

 - Retire at 55 was my number.  It's not up to the IFA to decide.

My philosophy entirely: advisers advise, their clients should decide.

cloud_dog

Diplodicus said:

Linton said:

Diplodicus said:

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.

Yes, I agree. 
Apart from the obvious IFAs, there are a group of posters who rush to their aid on this board. For three main reasons:

1) The poster has an ongoing relationship with an IFA and will not contemplate the idea that they may be wasting their money.

2) The poster thinks himself a cut above posters who arrive on the board with basic questions. Hence, "I'm qualified to DIY, you're not." It lets them feel superior.

3) The poster is acutely conscious of cost but does not want to pay for financial adviser advice; cravenly hoping their unqualified support may stand them in good stead if they ask for free advice. As Shakespeare said "Where thrift may follow fawning."

The problem with the anti IFA brigade is that do not seem to understand what an IFA is for.  Clue: It's not to choose future outperforming funds. 

There is no anti IFA brigade. There is only a strong kickback to any post challenging the IFA agenda.

Anyway to respond to your points:
1) I am not an IFA, married to an IFA nor do I have any other personal links to IFAs.  I have not sought advice from an IFA for perhaps 30 years.  However the one I did talk to at that time certainly changed my life.
(upshot: retire at 55)
That became my primary financial objective and 20 years later I retired.

And now your sense of self worth is tied up with that decision. 

Note that you are near the bottom of the Great British Bake Off table. Is it not the case that you are so invested in received wisdom of investment strategy  - bolstered by others including IFAs - that you cannot now change horses midstream but must stick to your course? I have sympathy if that is the case.

I can only assume you didn't digest the points Linton was expressing.

Sometimes you need to start with knowing what do you need to ask in order to understand and qualify what you don't know in order to be able to define the goals in moving forward.  It is only from that position that the choices you make can be relied upon.

The reason I've commented on this is that it is exactly the same situation I work in, albeit business/IT is my realm.  I can sum up my role very simply.... Someone who spends time evaluating and then asks/states the bleeding obvious.  And yet there are large organisations who pay lots of money for me to do just that.

For you to simply dismiss that critical value comes across as being a little naive, it's not just about picking a fund.

HeyYeah

Hi CC.

If they have the same investments then the returns would be the same - minus fees. As I understand it, one has a higher upfront cost but no additional costs after that. One is initially cheaper but you continue to pay a % of your investment every year ongoing. Neither is better or worse, it just depends on which is cheaper in your situation. 

Personally I'm not for or against an IFA. We all need to understand our investments, help with asset allocation, what we are being charged and when; so if an IFA helps then it's useful. That is an entirely personal decision and there is no right or wrong (whatever anyone says).

For me, I wouldn't like to pay an ongoing fee to an IFA to manage my funds, but I wouldn't mind paying for occasional one-off advise, such as your question above or tax implications etc..

Diplodicus

cloud_dog said:

Diplodicus said:

Linton said:

Diplodicus said:

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.

Yes, I agree. 
Apart from the obvious IFAs, there are a group of posters who rush to their aid on this board. For three main reasons:

1) The poster has an ongoing relationship with an IFA and will not contemplate the idea that they may be wasting their money.

2) The poster thinks himself a cut above posters who arrive on the board with basic questions. Hence, "I'm qualified to DIY, you're not." It lets them feel superior.

3) The poster is acutely conscious of cost but does not want to pay for financial adviser advice; cravenly hoping their unqualified support may stand them in good stead if they ask for free advice. As Shakespeare said "Where thrift may follow fawning."

The problem with the anti IFA brigade is that do not seem to understand what an IFA is for.  Clue: It's not to choose future outperforming funds. 

There is no anti IFA brigade. There is only a strong kickback to any post challenging the IFA agenda.

Anyway to respond to your points:
1) I am not an IFA, married to an IFA nor do I have any other personal links to IFAs.  I have not sought advice from an IFA for perhaps 30 years.  However the one I did talk to at that time certainly changed my life.
(upshot: retire at 55)
That became my primary financial objective and 20 years later I retired.

And now your sense of self worth is tied up with that decision. 

Note that you are near the bottom of the Great British Bake Off table. Is it not the case that you are so invested in received wisdom of investment strategy  - bolstered by others including IFAs - that you cannot now change horses midstream but must stick to your course? I have sympathy if that is the case.

I can only assume you didn't digest the points Linton was expressing.

Sometimes you need to start with knowing what do you need to ask in order to understand and qualify what you don't know in order to be able to define the goals in moving forward.  It is only from that position that the choices you make can be relied upon.

The reason I've commented on this is that it is exactly the same situation I work in, albeit business/IT is my realm.  I can sum up my role very simply.... Someone who spends time evaluating and then asks/states the bleeding obvious.  And yet there are large organisations who pay lots of money for me to do just that.

For you to simply dismiss that critical value comes across as being a little naive, it's not just about picking a fund.

Shall I compare thee to an IFA?
I'm not sure your situation is exactly the same as theirs, cloud_dog. Come to that, I'm not sure Linton's last-century meeting with an IFA is entirely typical either. Whilst his reason for bringing it in to the conversation is transparent, I believe IFAs minding their business model may describe that once-in-a-lifetime engagement as "sub-optimal."

But more than that, I don't believe there is a magic formula nor even a template by which its adherents "win the game." 
It is noticeable that those who attain financial independence and retire early still cannot seem to let go of their preoccupation. Something of a paradox, but this board gives it proof.

Linton

Diplodicus said:

cloud_dog said:

Diplodicus said:

Linton said:

Diplodicus said:

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.

Yes, I agree. 
Apart from the obvious IFAs, there are a group of posters who rush to their aid on this board. For three main reasons:

1) The poster has an ongoing relationship with an IFA and will not contemplate the idea that they may be wasting their money.

2) The poster thinks himself a cut above posters who arrive on the board with basic questions. Hence, "I'm qualified to DIY, you're not." It lets them feel superior.

3) The poster is acutely conscious of cost but does not want to pay for financial adviser advice; cravenly hoping their unqualified support may stand them in good stead if they ask for free advice. As Shakespeare said "Where thrift may follow fawning."

The problem with the anti IFA brigade is that do not seem to understand what an IFA is for.  Clue: It's not to choose future outperforming funds. 

There is no anti IFA brigade. There is only a strong kickback to any post challenging the IFA agenda.

Anyway to respond to your points:
1) I am not an IFA, married to an IFA nor do I have any other personal links to IFAs.  I have not sought advice from an IFA for perhaps 30 years.  However the one I did talk to at that time certainly changed my life.
(upshot: retire at 55)
That became my primary financial objective and 20 years later I retired.

And now your sense of self worth is tied up with that decision. 

Note that you are near the bottom of the Great British Bake Off table. Is it not the case that you are so invested in received wisdom of investment strategy  - bolstered by others including IFAs - that you cannot now change horses midstream but must stick to your course? I have sympathy if that is the case.

I can only assume you didn't digest the points Linton was expressing.

Sometimes you need to start with knowing what do you need to ask in order to understand and qualify what you don't know in order to be able to define the goals in moving forward.  It is only from that position that the choices you make can be relied upon.

The reason I've commented on this is that it is exactly the same situation I work in, albeit business/IT is my realm.  I can sum up my role very simply.... Someone who spends time evaluating and then asks/states the bleeding obvious.  And yet there are large organisations who pay lots of money for me to do just that.

For you to simply dismiss that critical value comes across as being a little naive, it's not just about picking a fund.

Shall I compare thee to an IFA?
I'm not sure your situation is exactly the same as theirs, cloud_dog. Come to that, I'm not sure Linton's last-century meeting with an IFA is entirely typical either. Whilst his reason for bringing it in to the conversation is transparent, I believe IFAs minding their business model may describe that once-in-a-lifetime engagement as "sub-optimal."

But more than that, I don't believe there is a magic formula nor even a template by which its adherents "win the game." 
It is noticeable that those who attain financial independence and retire early still cannot seem to let go of their preoccupation. Something of a paradox, but this board gives it proof.

The people who have attained independence on this board are typical of those who have attained financial independence, are interested in personal fnancial management and contribute to online forums.  I dont think you can deduce much more than that.

PS, just noticed the first sentance I highlighted...
There is no magic formula or template by which anyone can "win the game".  If there were everyone could follow it without advice.  However there are plenty of ways by which you can guarantee failure, barring a lottery win.   Getting advice from an IFA will help you avoid them.  

Linton

You have only specificed one charge.  Is the 1.5% a one-off or annual charge?  I would hope the former and if so what is the ongoing charge?

Specifying an expected return could be difficult since this would normally completely depend on the world economy. .  However Pru do specify one for the Prufunds.  The reason is that they smooth the returns by keeping money back in the good times and paying it out when conditions are bad.  The extra complexity will lead to higher fees.  But in your case since your alternative is cash ISA's and fixed savers which would suggest a dislike of short term risk the use of such funds seems appropriate to me.   Much better than cash ISAs.  You dont know the fees charged on savings accounts since the banks dont have to tell you.

dunstonh

1) Move entire 175,000 Pension away from Aviva to a Standard Life platform, as they offer more funds and a better way of moving money about.

Aviva platform and Abrdn (new name for Std Life) use the same platform software. Although Aviva is on a later version than Standard Life.  But Aviva's configuration shuts off a lot of data and information. Standard Life's configuration is much better.   Aviva will offer a retention deal that probably put it in the 0.1x% range.    So, cheap.  Although the Aviva's servicing is not as good.  Ignoring cost, I would pick Abrdn over Aviva.

2) Invest my £158,000 savings into a Prufund Growth fund, instead of me relying on basic cash Isa's or fixed savers averaging just 1% interest.

Ugh.  Investing is about opinion but I am not a fan.

The fund Manager charge for handling my PENSION funds in the Standard life platform is 1.12% of my pension fund.

That is expensive for just the fund.  Indeed, 1.12% would be the ideal ballpark for ALL costs (adviser, platform and investments).

The fund manager charge for handling SAVINGS in the PruGroth platform is 1.1% of  whatever savings amount I move over.

You are paying extra for the smoothing of the volatility.    If you accept conventional investing is going to be volatile, then you can use more conventional investments and avoid that extra cost.

And if I was to give the go ahead what would you advise I should request in terms of a return on investment  in otherwords should IFA put in writing what they have agreed to do and what return the expect from the funds proposed.

Impossible to say what the returns would be and no IFA should be telling you what they should be.   The best you can get is past performance but the last decade has been very good (above the norm).  So, you would expect realistic expectations to be set.

eskbanker

ChainsawCharlie said:

And if I was to give the go ahead what would you advise I should request in terms of a return on investment  in otherwords should IFA put in writing what they have agreed to do and what return the expect from the funds proposed.

The conversation should be the other way round, i.e. you should be outlining your objectives, in terms of how much money you believe you'll need and when, and only then should the IFA be proposing an investment strategy that stands the best chance of meeting this.

jimjames

IanManc said:

robatwork said:

IanManc said:

And no, they can't charge what they like. They are in a competitive market, like anyone in financial services, and people shop around, based on price and quality of service. That's how markets work.

This is actually an interesting point. How do you shop around for an IFA with good quality of service with a competitive price?
........................

To compare them with brain surgeons is insulting to brain surgeons. 

You shop around by asking for quotes. IFA firms are used to being asked. An acquaintance of mine wanted an advice document that was required before he could transfer a pension to a SIPP. He was quoted more than £.5k by one firm, around £2k by several, and £550 by the one he went with.

Although the £550 one may have been cheaper it might have also cost him money long term if the advice was less comprehensive than the others. It might have just been a tick box exercise so made no difference but some people have taken all cash from a pension and then been hit by tax bills that could have been avoided if they'd understood the risk

Langtang

ChainsawCharlie said:

Many thanks guys  those are fabulous detailed answers to my question, I would like to thank
Linton, Dunstonh, eskbanker for taking the time to assist.
Cheers
CSC

(taking notes)