Financial Adviser Charges

midsummergirl

Hi - I've had an ISA with a financial adviser (my husband uses the FA for his pension) and have for the first time had a good look at the charges on my ISA, as on £33k ISA I'm paying a total of £765.00 charges.  It breaks down as £493.38 (1.49%) Service Ongoing (which I assume is for the FA), and the Product Cost is 0.81% or 271.70.  Given it's not doing well at the moment (like other ISAs) it seems it's all being eaten up in fees.  Are these fees reasonable?  I have no idea.  Many thanks.  

TadleyBaggie

FA or IFA? Anything over 1% is high in my book. My IFA used to charge 0.5% but on a much higher value portfolio (~300K).

Albermarle

As above 1.5% is high. Although £33K is not a lot in this area, you would have thought the fact they are looking after your husbands SIPP as well, would mean they would do it for less.
Product cost of 0.8% is also on the higher side, which would indicate they are managed funds rather than passive ones.
Many on here would baulk at paying 0.3% never mind 2.3 % in total ( although in reality most will be paying 0.5% to say 0.8%) 

dunstonh

  It breaks down as £493.38 (1.49%) Service Ongoing (which I assume is for the FA), and the Product Cost is 0.81% or 271.70. 

Service charges normally refer to platform and adviser.  Not just adviser.   The most common charge range is 0.25% to 1.00% for an adviser.   So, 1.49% would be unexpected.   Product charge is not normally seen with most IFA arranged investments.   It is more common with FA products  But the usual breakdown is service charge (adviser and platform), fund OCF, fund TC, fund IC.   

However, if you are looking at the annual cost and charges disclosure, there is a flaw with those.  
1) if its an old commission related plan and there are rebates, the rebates are not included
2) the monetary amount of the charges will be correct for the amount paid but the percentage charge will be wrong.   This is because they take the amount you paid and use a snapshot date to work out the percentage.  As values are down, it will give show a percentage that is higher than it actually is.
3) the Transaction Charges (TC) column of the charges can be disregarded.  It's not a physical charge but a synthetic calculation of what your share of the fund transaction charges could be.   

 Given it's not doing well at the moment (like other ISAs) it seems it's all being eaten up in fees.  Are these fees reasonable?

The fees are not what is causing the loss.  Some of the fees are synthetic and not real (e.g. transaction costs).   The loss is because of market events in 2022.

The cost of the adviser is going to be a chunk of that but its up to you to decide whether you need an adviser or not.  However, its unclear what the cost of the adviser is from your post.   If you dont want the adviser then you can ask them to remove their charge.

adindas

midsummergirl said:

Hi - I've had an ISA with a financial adviser (my husband uses the FA for his pension) and have for the first time had a good look at the charges on my ISA, as on £33k ISA I'm paying a total of £765.00 charges.  It breaks down as £493.38 (1.49%) Service Ongoing (which I assume is for the FA), and the Product Cost is 0.81% or 271.70.  Given it's not doing well at the moment (like other ISAs) it seems it's all being eaten up in fees.  Are these fees reasonable?  I have no idea.  Many thanks.  

It will depend on what you are looking for and what you are paying for. If it is a complicated advice such as pension, tax effective investment, etc might be worthy. If you sit together with people where they could see all of documents, you could talk to them, they might understand your case better. It is reasonable to pay someone for the time they spend with you. But this could be just a one-off advice no need to be ongoing if the case is not complicated imo. A multi millionaire hiring a financial advisers to help them to avoid or reduce taxes using a winding ways but legal is certainly worthy to hire a financial adviser as it might  save them more money.

But looking into the amount of your investment of £33k with the fee of £765, it does not make sense, at least to me. Let alone there is an ongoing charge. and your investment is not performing well as stated above.

If just want to invest with intention to grow your money, you blindly throw your money into index or global equity tracker, DCA regularly and forget it there is high chance you will beat what you have been advised. Put it into high interest saving, risk free, you might even beat them,

A few people do that by themselves. If you put your case here a few people with similar case with yours might give their personal opinion and discussed to be seen by other people so the particular person could see the benefit and drawbacks of particular opinion. Certainly the particular person will need to have a basic knowledge to understand the benefit and drawbacks of each approach and make judgement by themselves.

But with significant improvement of search engine, AI, there is high chance you will find the answer of your particular case from a more authoritative sources. Your fear of not being able to do something before even try it is your main enemy. Keep in mind many of world most successful investors are contrarians taking a calculated risk.

Beddie

midsummergirl said:

Hi - I've had an ISA with a financial adviser (my husband uses the FA for his pension) and have for the first time had a good look at the charges on my ISA, as on £33k ISA I'm paying a total of £765.00 charges.  It breaks down as £493.38 (1.49%) Service Ongoing (which I assume is for the FA), and the Product Cost is 0.81% or 271.70.  Given it's not doing well at the moment (like other ISAs) it seems it's all being eaten up in fees.  Are these fees reasonable?  I have no idea.  Many thanks.  

Those charges are too high, they are eating into your gains.

You could set up an ISA yourself and pay less than 1%, with Vanguard, iweb or others. Even cheaper if you use tracker funds. It's easy to do and you can pick similar/same funds to what you have now.

However, you may value the adviser and accept there is a cost to this arrangement. You could ask them to stop charging you the annual "service charge" or whatever they call it, so you just pay the fund and platform charges, should save you about 1%. All you miss out on is that letter they send you twice a year, no great loss.

Perhaps your husband should also look at the fees being charged, to make sure he is happy with the costs and the service he's getting.

midsummergirl

Thank you everybody - I really do appreciate you taking the time to comment.  Overall, I think what is being said is that it's too much - especially at the moment.  I'd be better off saving my £700 per year fees and getting 4.5% interest on a cash-only ISA although I think I will keep it stocks and shares but do as Beddie suggests.  We are seeing the adviser next week, so it will be interesting to see what he says. 

Alistair31

You are being robbed.

allegro120

midsummergirl said:

Hi - I've had an ISA with a financial adviser (my husband uses the FA for his pension) and have for the first time had a good look at the charges on my ISA, as on £33k ISA I'm paying a total of £765.00 charges.  It breaks down as £493.38 (1.49%) Service Ongoing (which I assume is for the FA), and the Product Cost is 0.81% or 271.70.  Given it's not doing well at the moment (like other ISAs) it seems it's all being eaten up in fees.  Are these fees reasonable?  I have no idea.  Many thanks.  

Forgive my ignorance, but why would anyone want to pay someone else to open an ISA account? It is such an easy thing to do and doesn't require any specialist skills. 

Linton

allegro120 said:

midsummergirl said:

Hi - I've had an ISA with a financial adviser (my husband uses the FA for his pension) and have for the first time had a good look at the charges on my ISA, as on £33k ISA I'm paying a total of £765.00 charges.  It breaks down as £493.38 (1.49%) Service Ongoing (which I assume is for the FA), and the Product Cost is 0.81% or 271.70.  Given it's not doing well at the moment (like other ISAs) it seems it's all being eaten up in fees.  Are these fees reasonable?  I have no idea.  Many thanks.  

Forgive my ignorance, but why would anyone want to pay someone else to open an ISA account? It is such an easy thing to do and doesn't require any specialist skills. 

The cost is not to open an S&S ISA account. It is, or should be, understanding the customers objectives, timescales, attitude to risk etc and then choosing appropriate investments.  Having opened and set up the account the next job, if required, is to monitor progress, check that the customers circumstances, objectives etc have not changed and if they have change the investments if necessary,, and be there if the customer has queries or concerns.

Albermarle

allegro120 said:

midsummergirl said:

Hi - I've had an ISA with a financial adviser (my husband uses the FA for his pension) and have for the first time had a good look at the charges on my ISA, as on £33k ISA I'm paying a total of £765.00 charges.  It breaks down as £493.38 (1.49%) Service Ongoing (which I assume is for the FA), and the Product Cost is 0.81% or 271.70.  Given it's not doing well at the moment (like other ISAs) it seems it's all being eaten up in fees.  Are these fees reasonable?  I have no idea.  Many thanks.  

Forgive my ignorance, but why would anyone want to pay someone else to open an ISA account? It is such an easy thing to do and doesn't require any specialist skills. 

In addition to what Linton said, a significant  proportion of the population is basically financially illiterate. Many are scared/apathetic of doing anything like opening new accounts etc. If you asked them about ISA limits, risk tolerance, what are stocks and shares etc, you would just get a blank look and/or a totally wrong answer. Paying for professional advice would be better than doing nothing at all, or making a mess of it.
I am not saying that applies to the OP, and the fact they have actually come on to a savings and investments forum would indicate otherwise.