Query about financial advisers and set up fees and Aviva products

Tabby026

Hi we had a financial adviser to see us yesterday and he said the set up fee for a product with Aviva would be 3 per cent is this the norm? or are there cheaper options out there? 

Basically I have a £40,000 cash ISA maturing and he suggested moving it to a low risk (level 4) Aviva ISA product, investing in 4 large companies,  He then said about moving our premium bond money £30,000 into the product to make it £70,000, as there would then be more money for it to grow in the long term, transferring £20,000 over to an ISA this financial year and the remaining £10,000 the next financial year.   

Are Aviva products good? 

I assume there will also be other fees

Such as an Aviva charge 0.4 per cent?

A fund charge from Avia if so, what is the percentage in regards to the 4 funds invested? 

Also, the financial advisers company take a charge of 0.5 per cent

Are there Dealing charges if I am trading in stocks and shares? If so what are they?

I have sent an email to the financial adviser asking him questions about the product, how it works and a fee breakdown as I think it’s important to get all the facts, as it is a lot of money we would potentially be investing.  

If anyone has any advice I would appreciate it.  Thanks in advance.

dunstonh

Hi we had a financial adviser to see us yesterday and he said the set up fee for a product with Aviva would be 3 per cent is this the norm? or are there cheaper options out there? 

Context is needed.   The average figure is around 1.8% across the industry (taken many years back).
On £10k, 3% is dirt cheap.  On £300k it is damned expensive.    Most advice firms will tier their initial charge or have a cap and collar.   

On £70k, 3% equates to £2100.     You could get better but not by much.  You could get a lot worse.

Are Aviva products good? 

Aviva offers's a whole of market investment platform and has the same investment options as all the other whole of market platforms.

I assume there will also be other fees
Such as an Aviva charge 0.4 per cent?

We have special terms with Aviva and my understanding is that most firms do.  0.4% is not on special terms basis and its at the higher end compared to what is available on other platforms (or Aviva on special terms)

A fund charge from Avia if so, what is the percentage in regards to the 4 funds invested? Aviva do not have a fund charge (unless you happen to use aviva funds).  Aviva has the platform charge.   The fund's used will have a fund charge.  You shoudln't be asking us what the fund charges are as we don't know your investments.   Your adviser will tell you this.

Also, the financial advisers company take a charge of 0.5 per centThat is optional.  However, it is probably worth it for the early years as you will have annual jobs to do  (bed & ISA for example).

Are there Dealing charges if I am trading in stocks and shares? If so what are they?You are not trading in stocks and shares.  You are buying investment funds.  If the adviser is using OEICS/UTs or Aviva's own range of insured funds then there are no dealing costs.

Tabby026

Thank you for that much appreciated. What are OEICS/UTs?

Albermarle

Tabby026 said:

Thank you for that much appreciated. What are OEICS/UTs?

Open Ended Investment Companies and Unit Trusts. They are very similar, with only some technical differences.

They are the most common way for people to invest. They are funds that include a wide range of other investments.

For example if you invest in an OEIC that is designed to follow the UK stock market, it will have within it many different company shares listed in the UK stock market. If you bought one that was focused on new technology, it would have lots of company shares like Apple, Google, Microsoft etc . Some funds are not 100% shares but also hold bonds, property etc .
So you buy units in the OEIC rather than buying lots of different investments yourself.

Tabby026

Thank you so much for your explanation. Once I find out what the four funds are, could I ask your opinion on them please? Many thanks for all your help.

Tabby026

• This is what the financial adviser came back with.
• Aviva will supply the platform which will allow us to buy the assets and for you to view them on the app.  
  
• You will have an ISA Account and a General Investment Account (GIA) / Investment Portfolio. These are known as the investment ‘wrappers’.
• Your ISA will remain an ISA upon transfer to Aviva. You will continue to enjoy tax free access.
• Once we have utilised your 2022/23 ISA allowance of £20,000 the remaining funds will be held in a General Investment Account (GIA) / Investment Portfolio.
• Your money will be invested in a portfolio of funds to match your multi-asset requirements and attitude to investment risk which we agreed was a level 4.
• Research is yet to be completed on the final fund selections.  These will be contained in my draft report to you.
• The Aviva ‘Platform’ charge will be 0.25% based on the amount you are looking to invest.
• Ongoing fund charges will be confirmed in my report to you on Tuesday.
• Our charge will be 0.50% 
• For the FSCS criteria you will be covered up to £85K per investment fund that you will have within your portfolio which I anticipate will contain 4 funds (4 x £85K).

Also attached information surrounding Aviva and the ‘Platform’.  I will email a draft report for you to view next Tuesday.

Does this all sound above board.   Any advice would be appreciated.

Albermarle

Tabby026 said:

Thank you so much for your explanation. Once I find out what the four funds are, could I ask your opinion on them please? Many thanks for all your help.

You can ask, but as nobody on this forum knows you, or any detailed knowledge about your finances, objectives etc, so you will not get any specific answers whether the funds are suitable for you.
For example a typical fund for a young person, who is happy with some volatility/risk and prepared to leave the investments for 20 years, would not be a typical fund for someone older/more risk averse.
There would be no reason to think the advisor would pick unsuitable funds, as presumably will have a lot of detail about you.

dunstonh

• The Aviva ‘Platform’ charge will be 0.25% based on the amount you are looking to invest.

that is more like it.  This indicates Aviva special terms.

Does this all sound above board.  

yes

Albermarle

• Ongoing fund charges will be confirmed in my report to you on Tuesday. Keep an eye out for the charges on the funds, you do want them too high. A simple tracker fund may only cost 0.1%/0.2% , something more managed will cost more. On average I would not want to be paying more than 0.5% maximum 
• Our charge will be 0.50% At a later stage you could always stop using the advisor if you wanted , although 0.5% for a £100K pot is pretty good. 
• For the FSCS criteria you will be covered up to £85K per investment fund that you will have within your portfolio which I anticipate will contain 4 funds (4 x £85K).
• Just to be clear, this does not cover any investment losses. Only really covers fraud/mismanagement but the chance of this happening is approx zero.

Tabby026

Thank you for all your help and advice.  Do you know if the financial adviser 0.5 per cent free is charged monthly or annually? Does it depend on the firm.  I know it comes out of the investment. Are the fund charges worked out monthly or annually? or again does this depend on the funds being invested? I am a risk level 4 and 47 years old, so I think he said it will be invested in somewhere for that level of risk and if I want to draw on it at 60 I will have 13 years to build up the pot. You have been so helpful I really appreciate it.

Albermarle

The Aviva platform fee will be payable monthly . This can be paid from a cash account in the S&S ISA( if it has one and if there is any cash in it) Otherwise the platform will sell a small part of one of your funds to pay their fee.

The charge for the funds is taken directly out of the fund by the fund manager , so you never see this charge.

Not sure how the advisor would be paid, monthly I guess in the same way the platform fee is paid.

On a different subject , pension provision is not mentioned? Is that because it is all sorted separately ? Maybe you are working in the public sector? Or not working ?