IFA charges - what is reasonable for initial planning and ongoing reviews?

shortseller09

Ibrahim5 said:

 Watch the negotiations on "The Apprentice".

Hahaha, I presume that's humour.

[Deleted User]

noalibi said:

Deleted_User said:

noalibi said:

Thank you for the comments so far.  Many touch on things I have considered myself - especially the comments about % charges given the amount of work doesn't necessarily increase with the size of the portfolio.  I have more confidence (trust?) in those IFAs with a cap.  As an example, one had high % charges for the initial engagement, but a (circa) £12k cap.

Also agree with comments about the need for annual reviews.  At the moment I don't have the confidence, so am looking at a longer term engagement.  If however, the annual reviews are nothing more than a nice meeting over a coffee once a year, then I can always discontinue and/or pay for further advice if/when required.

The 0.75%-1.00% annual fees don't include the platform or fund fees, whereas the 1.8% one does.  Not sure if this suddenly makes the 0.75% look bad and the 1.8% look good.

You amassed a decent amount if money over the years.  Was it from investments or did the money just land in your account? 

Although it would have been nice for it to land in our account, it was actually from a combination of starting early (I started when I was 24) and increasing my contribution by 1% whenever I was lucky enough to have a pay review.  I encouraged my OH to do the same.  My logic was always that it would be easier to reduce contributions in the future than it would be to play catch-up.  I also avoid default funds.  In hindsight, I would have paid more interest into which funds I'd invested (i.e. understanding charges and reviewing performance) as many of my older schemes would have done better had I only paid a little more attention.  Note to my younger self - read (and lookup the bits you don't understand) the annual statements.  They are boring, but once you become familiar with them you can make much better decisions.

So, you got the important things right:  Pay attention to investing early, often and a lot and stay invested. 

There is a strong argument to be made that “forgetting” about investments once they are made is better for your balance than paying too much attention.  With hindsight we should have bought APPL for 30c in mid 90s so I don’t worry about that.  

Agree that people should put more effort up front to understand what they are putting their hard earned money into.  As it is, many seem to spend more effort into spending 100 quid on a toy on Amazon than on investing everything they have for old age. 

That aside, you obviously did well over a number of decades through market downturns of the early 2000s, 2008, 2020 and, I assume, without annual IFA reviews.  Help me understand why you feel that you need an expensive intermediary now on an ongoing basis? 

noalibi

Deleted_User said:

noalibi said:

Deleted_User said:

noalibi said:

Thank you for the comments so far.  Many touch on things I have considered myself - especially the comments about % charges given the amount of work doesn't necessarily increase with the size of the portfolio.  I have more confidence (trust?) in those IFAs with a cap.  As an example, one had high % charges for the initial engagement, but a (circa) £12k cap.

Also agree with comments about the need for annual reviews.  At the moment I don't have the confidence, so am looking at a longer term engagement.  If however, the annual reviews are nothing more than a nice meeting over a coffee once a year, then I can always discontinue and/or pay for further advice if/when required.

The 0.75%-1.00% annual fees don't include the platform or fund fees, whereas the 1.8% one does.  Not sure if this suddenly makes the 0.75% look bad and the 1.8% look good.

You amassed a decent amount if money over the years.  Was it from investments or did the money just land in your account? 

Although it would have been nice for it to land in our account, it was actually from a combination of starting early (I started when I was 24) and increasing my contribution by 1% whenever I was lucky enough to have a pay review.  I encouraged my OH to do the same.  My logic was always that it would be easier to reduce contributions in the future than it would be to play catch-up.  I also avoid default funds.  In hindsight, I would have paid more interest into which funds I'd invested (i.e. understanding charges and reviewing performance) as many of my older schemes would have done better had I only paid a little more attention.  Note to my younger self - read (and lookup the bits you don't understand) the annual statements.  They are boring, but once you become familiar with them you can make much better decisions.

So, you got the important things right:  Pay attention to investing early, often and a lot and stay invested. 

There is a strong argument to be made that “forgetting” about investments once they are made is better for your balance than paying too much attention.  With hindsight we should have bought APPL for 30c in mid 90s so I don’t worry about that.  

Agree that people should put more effort up front to understand what they are putting their hard earned money into.  As it is, many seem to spend more effort into spending 100 quid on a toy on Amazon than on investing everything they have for old age. 

That aside, you obviously did well over a number of decades through market downturns of the early 2000s, 2008, 2020 and, I assume, without annual IFA reviews.  Help me understand why you feel that you need an expensive intermediary now on an ongoing basis? 

Jury is still out on the ongoing reviews, although likely to see how the first go over the first year or two while I become comfortable with "decumulation" rather than accumulation.  I suspect switching mindset from a saver to a spender is going to be harder than I expect.  Part of the reasoning for using a financial planner is to ensure I'm not the richest person in the cemetery, but also to ensure I don't run out of funds for the care home :-).  You are correct about the argument for "forgetting" about investments.  Very good strategy.  My point was more to do with not completely forgetting about investments and also taking a little time out to understand the annual statement and notice when a fund consistently underperformed others over many years.

[Deleted User]

“Part of the reasoning for using a financial planner is to ensure I'm not the richest person in the cemetery, but also to ensure I don't run out of funds for the care home :-).”

Yes, it is a difficult balance and a challenge for all of us. Even more so for an advisor. Every time a client makes a withdrawal, it goes out of IFA’s pocket because his future income from this account is being reduced.  

For me… I can’t delegate something this important to a third party with misaligned  interests.  Given that I have to make decisions myself, I might as well figure out and understand the strategy.   Variable Percentage Withdrawal Strategy appeals but there are other options out there.  And Prof Wade Pfau has written a couple of really good books on the subject.