Relationship With Your IFA

Bobziz

I don't have an IFA yet but will do in a couple of years. I will use one to provide help on setting out and sticking to an investment/retirement plan and to enable decisions to be made without emotion interfering too much. I will still follow the detail as I enjoy the nuts and bolts and would expect some errors to be made.

Albermarle

cfw1994 said:

DT2001 said:

I’ve been with my IFA for 6 years. I keep a regular check and have only found one error when a new investment wasn’t made due to an administration error. He forgot to take his initial fee when I 1st used him (for a lump sum bonus payment into a new pension) for 3 months. The funds had dropped as it was in the midst of the Greek € crisis and he took the % of the fund at that time.

I run things past him on an irregular basis and find him a helpful sounding board. If he is unsure he says so and comes back to me after researching the matter. We have a good working relationship and I know he will stop me from being too adventurous bearing in mind where we are in relation to our end goals.

I think he is on par with other professionals I’ve worked with (accountants/solicitors/bankers etc).

I guess the main difference between your IFA & the other professionals you've worked with is how you pay them.  I imagine the IFA is making rather more money from an on-going % if your net worth than your accountant/solicitor/banker!

My accountant charges me under £300 to deal with my tax return (including a small holiday let business).  Also takes the occasional phone call without a fee.  My bank pays me to keep my money safe.  Solicitors I've used over the years (mainly regarding house purchases) have all taken a fee for the task.

In theory an IFA could also charge an hourly rate for some advice....but in reality, I'm not sure any do.  Far easier to take 0.35-1% instead.


On the OPs topic: if I felt I had to double check everything my advisor was doing, I'd drop them like a stone and manage things myself! 

People often talk about the "peace of mind" in having a wise head to run things past with their financial advisors....those advisors may indeed help people towards their goals, with financial areas they feel they lack confidence in, and I do understand that.....as DT2001 put it, "a helpful sounding board" where you have no other options.....
....but having to "monitor things most days" seriously does not meet that definition of peace of mind to me!

If you are doing that, you can probably manage things yourself.  If you still feel the need for help....seek a new IFA!

 

I have to agree with these sentiments . If I was paying £5K a year and having to be checking all the details myself , and there was more than the very occasional mistake, I would not be happy .

SMcGill

Thanks. Could you be more specific?

What I mean is that it’s not just about getting the lowest fees or the highest returns, in my view anyway. You might accept high fees for having someone manage everything for you, but if you’re a natural back seat driver what’s the value in that? Or you might accept a solution that is very clever but it gives you sleepless nights.

My personal experience of IFAs is limited but wholly positive. I’m a transactional client who will always go with a mainstream solution because it makes me feel comfortable. My IFA understands that so I’ve always had fair charges for the work done, no attempts to upsell into services I haven’t asked for and no left-field suggestions put forward.

That might horrify some people, but it’s what works for me. 

GSP

SMcGill said:

Thanks. Could you be more specific?

What I mean is that it’s not just about getting the lowest fees or the highest returns, in my view anyway. You might accept high fees for having someone manage everything for you, but if you’re a natural back seat driver what’s the value in that? Or you might accept a solution that is very clever but it gives you sleepless nights.

My personal experience of IFAs is limited but wholly positive. I’m a transactional client who will always go with a mainstream solution because it makes me feel comfortable. My IFA understands that so I’ve always had fair charges for the work done, no attempts to upsell into services I haven’t asked for and no left-field suggestions put forward.

That might horrify some people, but it’s what works for me. 

Thanks for your contribution and sorry it’s probably me but you’ve lost me.

cfw1994

GSP said:

SMcGill said:

Thanks. Could you be more specific?

What I mean is that it’s not just about getting the lowest fees or the highest returns, in my view anyway. You might accept high fees for having someone manage everything for you, but if you’re a natural back seat driver what’s the value in that? Or you might accept a solution that is very clever but it gives you sleepless nights.

My personal experience of IFAs is limited but wholly positive. I’m a transactional client who will always go with a mainstream solution because it makes me feel comfortable. My IFA understands that so I’ve always had fair charges for the work done, no attempts to upsell into services I haven’t asked for and no left-field suggestions put forward.

That might horrify some people, but it’s what works for me. 

Thanks for your contribution and sorry it’s probably me but you’ve lost me.

It reads like SMcGill does not have a % taken by their IFA for the FUM (funds under management) because they perhaps are managed on a “mainstream solution” (perhaps Vanguard LS60 or suchlike?
This implies he uses the IFA occasionally (transactional client), & pays an hourly rate for advice.
If so, that is a progressive IFA, IMHO!   

IF I’m right, I’d be curious to know how often you use them, & even more curious what sort of rate the IFA charges.

Now let’s see if I got that wrong 🤷‍♂️


OP, you asked “because I have nothing to compare against should I accept what I have or is there a 100% accurate service out there? I wouldn’t want to change my IFA if he was already one of the best without me knowing.”

I doubt very much whether you will ever know if they are “one of the best”.  No league tables for IFAs, although I recall someone posting a link to see if any complaints had been made about them….

Part of the IFA goal, quite rightly, is to become the very knowledgeable friend in your relationship with them.   It’s about making you comfortable that they are giving you wise information that you would otherwise not know.  

Once you are able to question things too deeply, & indeed find yourself spotting errors by them, it could be a sign that you no longer need the relationship 😉

I have a good friend who uses SJP (St James Place) for his finances.  We had a few discussions pre-Covid about them.  

Most here will know there are a myriad of reasons to never use them, but he enjoys his annual lunch bought by the FA (they are *not* independent!), and wouldn’t countenance changing despite the evidence that he would be wealthier kicking them in to touch and finding a truly Independent FA.  

I’ve given up: it’s his money to throw away, and none of my business really: he probably thinks I’m a busybody know-it-all 🤣🤷‍♂️

Here’s something I do know, in case it helps anyone reading this!  Halfords are currently offering free test rides for eBikes of up to 6 hours.  Off later with a pal to have a go.  I firmly believe I am some years from *needing* an eBike, but always wanted to have a go, & my pal is seriously interested 🚴‍♂️👍

IvanOpinion

My first IFA went bankrupt after putting me in a load of funds that I now know were totally unsuitable for me. 

My second IFA simply forgot to contact me for several years but still remembered to take their monthly fee.  When I realised I had been paying them thousands of pounds for nothing I told them I no longer needed their services.  Suddenly I became an important customer again with regular mailings and even an annual statement ... just like I used to receive, only now I knew it was nothing more than a dump of whatever software they were using, probably took the secretary less than 15 minutes to print the fancy charts, amend a letter template, attach, bind and put in the post.

So for simple portfolio management an IFA is not a necessity.  However I still believe they can provide vital information for significant life changes such as marriage, pregnancy, promotion, retirement etc.  The problem is trying to find one that will do it for a realistic fee.  I have been thinking about retiring and have been trying to get some advice through a one-off fee, but every single IFA I have approached has determined the size of portfolio and then thinks they are entitled to a 5 figure sum.  One even had the audacity to suggest 5% initial fee and 2.5% annual management - they got quite upset when I laughed in his face.

SMcGill

IF I’m right, I’d be curious to know how often you use them, & even more curious what sort of rate the IFA charges.

Yes, you’re right I’ve taken advice three times in the last 3 years. Once to move an old personal pension to a more modern one (£750), once to find a S&S ISA (£0) and right now he’s looking at the best way to phase my 2 DB pensions, 1 personal pension and cash. He’s given me a fixed fee of £450 for that.

JoeCrystal

I had an IFA to transfer to RL pension pot few years ago at the one off fixed fees at £300 taken out of pension pot). Indeed, I was told that the minimum charge is £1,250 for such transaction but since the pot was so small and the fact I used him before and likely will do so in the future, it is £300 instead. So there are some flexibility on that. I still use him if I need to do any changes with RL for free. Especially RL is very sniffy dealing with their customers directly.

Albermarle

Both the above costs mentioned actually seem quite reasonable, especially when you see some of the amounts other posters mention.

Ibrahim5

One problem is that the fees are taken out of the pot. They should make you take the fees out of a cashpoint and take the notes in a suitcase to the IFA. People might then realize how much it is costing them.