IFA service and charges

Prism

bostonerimus said:

zagfles said:

fcjf said:

Audaxer said:

Apart from the initial charge of £10k, the ongoing fees totaling 2.12% amounts to nearly £10k per annum which seems very high. I don't know anything about the SIPP provider or adventurous portfolio they propose, but with these charges I think it would have to produce very good returns to beat a low-cost globally diversified portfolio that could be self managed.

However I can understand if you feel more comfortable going through an IFA. I would suggest maybe approaching a few IFAs to compare their charges, and making sure they are definitely Independent FAs, and not just FAs. Has the IFA you approached advised what funds are in their Spectrum A portfolio, or given you a global breakdown and percentage of equities in the portfolio etc.?

The ongoing fee is 0.91%, so approx. £4000 but still makes me uneasy, certainly without knowing what I get for that

Yes, they provided a full list of the funds in the recommended portfolio along with the % allocations.

I would be happy just transferring the pensions myself, it was more the choice of funds to run with that I maybe thought could be done better by an IFA both now and going forward. If the year on year improved performance by the IFA provider at least matches their fees then I'm not in effect paying anything, or is this not the way to look at it?   

Why do you think an IFA would deliver better performance? That's not the job of an IFA, their job is to assess your overall finances, risk appetite, objectives etc and come up with a suitable investment plan. A fund manager's job is to deliver performance, that's what you pay fund managers for.

Sometimes you pay a fund manager to "outperform", sometimes they equal the bench mark and often you pay to underperform. What if all we do when we pay fund managers is perpetuate a myth that they are of any use whatsoever...akin to "telephone sanitation engineers"?

Sometimes you pay a fund manager to do something different, like invest in battery storage technology or social housing or future innovators or even something as simple as invest in small companies. Other times the goal is a bit more variable like to beat inflation or to provide a reliable income stream. These are difficult things to do using just index funds as their often isn't a suitable index or even if there is a fund to follow it. Going global is not the only way.

In the same way an IFA can advise on inheritance, tax planning and drawdown strategies which can be quite complicated. Not everyone has a huge pot to draw down a small income from and often different income stream come available at different time points further complicating the 'how much should I take this year?' question.

Cus

Maybe the 0.91% is 0.75% fund management fee plus Vat, plus another 0.01% for custody fee.

Ibrahim5

Yes I liked the 0.22% custody charge. That is much more than all the charges I pay in total for my investments. I assume without that they would just lose your money.

Prism

Ibrahim5 said:

Yes I liked the 0.22% custody charge. That is much more than all the charges I pay in total for my investments. I assume without that they would just lose your money.

That will likely be the platform charge which seems pretty reasonable. Mine is 0.25%