Sacking our IFA

GSP

OP, was this national firm True Potential by any chance?

BarbaraG2000

GSP said:

OP, was this national firm True Potential by any chance?

No - it was Tenet & You.

Cus

How much do you pay the discretionary portfolio manager?

squirrelpie

BarbaraG2000 said:

GSP said:

OP, was this national firm True Potential by any chance?

No - it was Tenet & You.

Hmm, https://www.moneymarketing.co.uk/news/tenet-plagued-by-relentless-exodus-of-member-firms/

I think I would take over my own affairs (that is what I did several years ago when my IFA sold out).

ISAs or cash are useful as an immediate source of money, but form part of your estate.

These days access to drawdown from a pension can be nearly as quick and pensions are outside your estate, but DC pensions can still be inherited effectively.

So people advise running down ISAs before using DC pensions. Inheritance taxation may or may not matter to you.

BarbaraG2000

Cus said:

How much do you pay the discretionary portfolio manager?

1% +VAT per annum, charged quarterly. No transaction fees.

IFA was taking 0.5% inc VAT.

IFA phoned me this morning - “a courtesy call” - 3 months too late.  I thought he would try to persuade me to change my mind, but he didn’t.  It transpires that they were not receiving trail commission on the pensions anyway - must have been a one-off charge when they set them up - and that’s over half our total pot.

I’ve also just noted that the consolidated portfolio summary the IFA sent excludes the ISA’s from which we are currently drawing income - which they set up and on which they have been receiving commission/advice fees as well.  So our pot is bigger than I thought!

Pat38493

BarbaraG2000 said:

Our managed portfolio has consistently outperformed the relevant indices.  

Out of interest have you done this analysis yourself over a long period or is this what the IFA or portfolio manager is telling you?  Also does it include any and all charges and costs?  From a later post it looks like you have been paying a total of 1.5% - the investments must be outperforming index trackers by a large amount to compensate for such high charges.

When I hear that a managed fund is outperforming the relevant indices, my first question would be - is it outperforming them by a sufficient margin to cover the much higher charges they are making.  I suspect that in a lot of cases the answer is no.

I guess of course there are other advantages like having someone else doing a lot of the admin and legwork for you.

Albermarle

1% +VAT per annum, charged quarterly. No transaction fees.

Just to be clear does this 1% include payment for the DFM services and for all the platform and investment fund costs ?

[Deleted User]

Yes, I am also curious about the “outperformance” claim.

Assuming the same level of risk, long term outperformance is suspect given the fees.  

A simple way to check is by looking at your time-weighted return and bond/equity percentages and then taking FTSE World combined with Barclays Bond Universe in the same proportion. That would be a rough comparison; the IFA may have picked riskier bonds and a subset of stocks thus taking on more risk.  The return data should be on your annual statements. 

bostonerimus

Financial fees are a drag on a portfolio in the best of times, but in drawdown when the value of your portfolio is heading South, they are a killer. 

dunstonh

1% +VAT per annum, charged quarterly. No transaction fees.

VAT should not be charged.
1% seems a lot for a DFM.  I don't like DFMs.  They have their place on niche clients and we have three clients on a DFM service and that is 0.25% (no VAT).  

IFA was taking 0.5% inc VAT.

That bit is ok. 

However, this is the problem with using Wealth management IFAs (or FAs) and networked IFAs (or FAs).   They outsource the investments to a third party and you end up paying more for them to do less work.

A directly authorised IFA running advisory portfolios would not have the DFM charge.   The IFA controls the investment strategy based on the research and data they buy in.   

 It transpires that they were not receiving trail commission on the pensions anyway - must have been a one-off charge when they set them up - and that’s over half our total pot.

Commission ceased at the end of 2012.