Paying my FA a fixed fee when I wont to topup my pension?

barnstar2077

numbersrule said:

My FA charges 2% fixed fee for cash additions and the total annual fee for the DIM type management is about 1.5%.
However, when you consider that the 2% is a one off, then my pension will live on into retirement for say 20 years, so 2% divided by 20 is only 0.1% extra equivalent on the annual fee.
When you also consider that the mix of funds I gain access to via this FA is typically resulting in growth of about 2.25% more than 'average equity growth based on comparisons with well known stock indices, this means that I am saving money compared with the riskier option of trying to DIY it via the 'popular' online platforms.

Many platforms allow you access to thousands of different funds.  Trackers and managed funds alike.  So your investment could be replicated for a fraction of the cost by DIYing.  It is great that you have found a solution that you are happy with, but you are not saving money by not DIYing.  Your last paragraph makes it sound like FAs have access to secret funds that will outperform the competition, which they don't.  The best/worst example being St James Place whos funds tend to underperform, despite charging exorbitant ongoing fees.

As others have said however, if someone is unable to DIY then they should contact some local IFAs. 

An IFA may stop you from selecting completely inappropriate funds for your circumstance, but that comes at a price on returns in the longterm.

lombrozo

Novia's platform charge is not 1.1%.   

The charges are normally broken down by 
Platform charge  (Novia in this case)
Investment fund charges
DFM charge (if a DFM is used - wealth management companies tend to use a DFM.  However, adviser firms do not)
FA or IFA charge
add them up and you have your bottom line.

According to the IFA's illustration/review, fees are:

Initial Adviser Fee
Adviser Fee 4.00%

Ongoing Adviser Fee: Figures Quoted Per Annum
Adviser Fee 1.00%

Novia & Liontrust
Ongoing Product Charges: Figures Quoted Per Annum
Platform Charge 0.29%
Fund Charges 0.87%

IFAs will make a point of highlighting their independence and ability to use the whole of market.  FAs will usually try and brush it under the carpet and move on quickly.   Some will use other words to make it sound like they are independent without saying that they are.

He must be an IFA as he DID go on about the ability to use the whole market, whereas my original pension could only use about 100 funds...

That would be a top up then.   And if the adviser is not doing top ups under their ongoing servicing agreement then you are wasting your money with that advice firm.  Time to move on to another.   They are taking the P.

"... doing top ups under their ongoing servicing agreement..."?

jimjames

lombrozo said:

That would be a top up then.   And if the adviser is not doing top ups under their ongoing servicing agreement then you are wasting your money with that advice firm.  Time to move on to another.   They are taking the P.

"... doing top ups under their ongoing servicing agreement..."?

Not charging an additional fee for top ups when you are already paying a yearly fee for the existing pension and will be paying that fee on the new money once it is in the account. Paying 4% of your lump sum out in fees sounds crazy if it's just adding money to an existing pension that you are already paying an annual servicing fee for.

Albermarle

This was a big learning curve for me, as the fee is not just whatever percent the IFA charges, but there are several elements:

• Novia fee
• DFM (Discretionary Fund Manager) fee
• IFA fee

In my case, all of these before were shrouded in mystery.

Just to be correct , you are missing the fee(s) for the investment fund(s) that your money is actually in.
Novia is just a platform for buying/selling/holding investments . The actual investment charges are in addition to their fee.

wjr4

lombrozo said:

Novia's platform charge is not 1.1%.   

The charges are normally broken down by 
Platform charge  (Novia in this case)
Investment fund charges
DFM charge (if a DFM is used - wealth management companies tend to use a DFM.  However, adviser firms do not)
FA or IFA charge
add them up and you have your bottom line.

According to the IFA's illustration/review, fees are:

Initial Adviser Fee
Adviser Fee 4.00%

Ongoing Adviser Fee: Figures Quoted Per Annum
Adviser Fee 1.00%

Novia & Liontrust
Ongoing Product Charges: Figures Quoted Per Annum
Platform Charge 0.29%
Fund Charges 0.87%

IFAs will make a point of highlighting their independence and ability to use the whole of market.  FAs will usually try and brush it under the carpet and move on quickly.   Some will use other words to make it sound like they are independent without saying that they are.

He must be an IFA as he DID go on about the ability to use the whole market, whereas my original pension could only use about 100 funds...

That would be a top up then.   And if the adviser is not doing top ups under their ongoing servicing agreement then you are wasting your money with that advice firm.  Time to move on to another.   They are taking the P.

"... doing top ups under their ongoing servicing agreement..."?

They are very expensive! 

dunstonh

He must be an IFA as he DID go on about the ability to use the whole market, whereas my original pension could only use about 100 funds...

Not necessarily.  Some FAs are able to use whole of market UT/OEICs but cannot use ETFs/ITs or a range of other types.  Any form of restriction prevents them from using the independent tag.     Or they use a DFM and the DFM is whole of market.   "Whole of market" is not a protected phrase with the FCA.  "Independent" is a protected phrase.  An FA must never refer to themselves as Independent.      So, in this case, they could sing about the investments being from the whole of market despite the fact they put 100% of their business on one platform using one DFM.

It pretty common that many FAs will go out of their way to give the impression they are IFAs by using alternative words that sound similar.   There was some research many years ago where people who had seen an FA were asked if their adviser was an IFA or FA.  Over half of them said IFA.

According to the IFA's illustration/review, fees are:

Lets just summarise that and say you are in damned expensive territory. 

This adviser is taking the P.

lombrozo

Hi folks,

The IFA is saying that I have to pay the fixed top-up fee because the pension is advised on (by him) and it is not an 'execution-only' transfer - does this explain things?

Thanks!

dunstonh

lombrozo said:

Hi folks,

The IFA is saying that I have to pay the fixed top-up fee because the pension is advised on (by him) and it is not an 'execution-only' transfer - does this explain things?

Thanks!

No. The whole point of paying for ongoing advice is that ongoing advice is paid for.    If you have to pay again then what is the point of the ongoing advice.    

Most advisers offering an ongoing advice service in return for an ongoing advice fee will provide the ongoing advice at no additional charge unless it involves specialist areas.   

You may want to ask what you get for the ongoing advice fee you are paying when it doesn't appear to cover ongoing advice.

wjr4

dunstonh said:

lombrozo said:

Hi folks,

The IFA is saying that I have to pay the fixed top-up fee because the pension is advised on (by him) and it is not an 'execution-only' transfer - does this explain things?

Thanks!

No. The whole point of paying for ongoing advice is that ongoing advice is paid for.    If you have to pay again then what is the point of the ongoing advice.    

Most advisers offering an ongoing advice service in return for an ongoing advice fee will provide the ongoing advice at no additional charge unless it involves specialist areas.   

You may want to ask what you get for the ongoing advice fee you are paying when it doesn't appear to cover ongoing advice.

A firm I used to work out done this, I left them quickly! What is the point of paying for ongoing advice if it doesn’t include top ups. 

jimjames

lombrozo said:

Hi folks,

The IFA is saying that I have to pay the fixed top-up fee because the pension is advised on (by him) and it is not an 'execution-only' transfer - does this explain things?

Thanks!

See what he says if you say there is no point paying for ongoing advice if it provides no benefit. It's not a transfer, it's a top up. Quite a different thing