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First time ISA advice in terms of fees and options for monthly deposits over 5 years.

Nearden
Posts: 2 Newbie

Hello, we are looking to invest monthly in an ISA (around £500 a month) and spoke to a FA from Wesleyan. They discussed various options, one of which was an ISA with profits fund to smooth out any fluctuations. The charges mentioned were 3% for every monthly deposit and 1% annual. Looking at other providers this seems steep. I have also looked at Vaguard Lifestrategy ISAs with a 0.22% charge which seems to be recommended on various websites. The investment would be for at least 5 years and in the main is to put money away for our kids. Does anyone have any experience with either of these schemes or any advice about charges. From the various research carried out I am leaning towards Vanguard. I've also looked at the Halifax. Thanks in advance
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spoke to a FA from Wesleyan. They discussed various options, one of which was an ISA with profits fund to smooth out any fluctuations.That couldn't have been a long conversation with the limited option that they have.The charges mentioned were 3% for every monthly deposit and 1% annual. Looking at other providers this seems steep.It is steep by today's standard and appears you didn't actually speak to an adviser. Advisers are not allowed to collect initial advice fees after 12 months. e..g they can take £xxx per month for 12 months but not longer than that. Otherwise a credit agreement is required as the deferment of the fee becomes a loan captured under the consumer credit act if longer than 12 months.
3% of each contribution is allowed though as a product charge if arranged with no advice. i.e. not an adviser.The investment would be for at least 5 years and in the main is to put money away for our kids.5 years is very short for a regular contribution. Realistically, you are looking at 15+ years as an ideal minimum. The reason is that only one contribution will be invested for 5 years. The second once would be 4 years and 11 months and so on. So, when you say at least 5 years, you need to be clear on what the likely timescale will actually be.I have also looked at Vaguard Lifestrategy ISAs with a 0.22% charge which seems to be recommended on various websites.0.22% OCF plus 0.07 TC plus the platform chargeDoes anyone have any experience with either of these schemes or any advice about charges.I wouldn't pick VLS or Wesleyann but out of the two, VLS would be my choice.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.1 -
Thank you for your response. Is there an ISA you would recommend as an alternative which would be appropriate for someone new to this? Thanks0
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Nearden said:The investment would be for at least 5 years and in the main is to put money away for our kids.
https://www.moneysavingexpert.com/savings/junior-isa/
The money would automatically be available to them at 18 (some parents prefer to control beyond that) but uses their own annual ISA allowances rather than yours, is ignored in the event of any future capital assessment you might be subject to, and offers better deals if/when moving the money from investments to savings leading up to its use.0 -
Nearden said:Thank you for your response. Is there an ISA you would recommend as an alternative which would be appropriate for someone new to this? Thanks
It can be confusing because some companies offer an ISA, and also offer investments with the same company name used, but be clear they are not the same thing.
For example Vanguard Lifestrategy is a range of investment funds . You can hold them in an ISA on the Vanguard investment platform . However you can also hold the Lifestrategy funds in an ISA on other platforms . The fund you pick is a lot more important than which ISA you pick to hold the funds.
Normally we are careful what we say about specific investments but I think it is clear the Wesleyan one is a very old fashioned expensive product .
As said above you can have an ISA in the childrens own name . If you want to do this the investment platform , Fidelity, offer a JISA with no charge , although you still need to pick an investment fund. You could pick a Lifestrategy fund or Fidelity also offer their own similar slightly cheaper range . In both cases there are different risk/potential growth funds within the range offered.1
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