IFA to FA - options to fix the current mess and moving forward

ComicGeek

My wife and I had personal pensions set up by an IFA 15 years ago. Trustworthy and experienced local IFA, who seemed to add value both in terms of overall tax strategies and fund selections. When he retired 4 years ago his business partner took over, but doesn't seem to be as experienced and we didn't get a good feeling about him. Looked around locally for a new IFA, but after speaking to a few firms couldn't actually find anything better and just kept it as it was. 

Then 2 years ago our IFA pushed us to move from Scottish Widows on the Quilter platform to True Potential, and transferring to their own pension and S&S ISAs. Our IFA specifically avoided telling us that he had changed from being an IFA to a FA with True Potential, and although we didn't pay any extra fees for the transfer/advice it does feel incredibly underhand - particularly as we believe that he is looking to retire himself shortly and would get paid by True Potential for transferring assets to them. Our now FA doesn't really provide any value any more. At the moment he is only contacting us to chase for signed forms to transfer the fees for a couple of insurance products he helped us with before - haven't had any reviews or input from him for the last 2 years, and frankly if I had followed the one piece of advice that he did provide would be much worse off now.

My wife has chronic illnesses, and that combined with a young son and our own really busy business means that I have taken my eye off the ball for too long. Trying to rectify that now, as I've still got 18-20 years until retirement.

Current fees are 0.4% service + 0.79% porfolio fee + 0.5% advice fee. Our pensions use standard TP portfolio appopriate for our risk levels, so our FA has never actually done anything. S&S ISAs currently use the exact same portfolios as the pensions.

Currently have around £710k split fairly evenly between us. My wife is very risk adverse, and I'm not going to have time to micro manage anything - I like the idea of having something that is set up once and left for the next 20 years, but don't want to spend £3.5k on a useless IFA/FA each year!

Do I:

1. Drop the FA tomorrow, but continue with True Potential at fees of 1.19% on the basis that it's easy to leave it in the current portfolios and they will manage everything.
2. Do something more drastic, and look for a new IFA.

I can guess some of the responses from regular posters already, but genuinely interested to get a wide range of views to ponder.

Pat38493

Unfortunately this seems to come up from time to time - there is a "loophole" if you want to call it that, where IFAs who are retiring or exiting the business can basically give their whole portfolio to one of these other companies without necessarily openly disclosing what they are up to.

1.19% is a lot on 710K and if you are then paying FA feeson top of that, I would say that you should do something about it.

If I was you I would be looking to get a new IFA who is a proper IFA.  You could also look at transferring your funds to a DIY platform and take a one off IFA advice on where to put it or even put it into index funds - it doesn't take much ongoing effort just a bit of upfront research and you will probably save more on charges than your FA was delivering anyway.

TallGirl

I found myself in the same situation with my adviser retiring and moving me to True Potential. I started a thread on it here https://forums.moneysavingexpert.com/discussion/6419835/is-it-time-to-change-from-a-wealth-manager-aka-true-potential-to-ifa-or-go-diy#latest

I managed to get True Potential removed as advisers from my SIPP which is with Scottish Widow and if I need advise I would rather pay for one off advice nearer retirement as I like you have not found TP does a lot for their money. When I told them I wanted to leave they still haven’t reacted says a lot I think. 

I’m still thinking of DIY my ISA but not done so yet.

Best of luck with what you decide. 

dunstonh

Then 2 years ago our IFA pushed us to move from Scottish Widows on the Quilter platform to True Potential, and transferring to their own pension and S&S ISAs. 

Are you sure they are an IFA.   SW to Quilter is perfectly fine.  SW's products were old fashioned and not that good by modern standards.  Although just in the last few months they have launched a new platform (well , they bought another and rebranded it) and it uses the same software as Quilter.

Quilter to TP doesn't make any sense.   Its going from a whole of market pension to restricted.    (and probably more expensive)

1. Drop the FA tomorrow, but continue with True Potential at fees of 1.19% on the basis that it's easy to leave it in the current portfolios and they will manage everything.

A service must be provided in return for the fee you are paying.  if you haven't had contact then you could ask for your ongoing servicing fees to be returned for those years.

TP have a dual offering.  remote/electronic servicing on investment matters only.  Aimed at smaller investors and no real advice given.   You may as well go with a multi--asset fund if that is the offering you have.    For larger investors, they have a more personalised offering.

1. Do something more drastic, and look for a new IFA.

That is less drastic as it means returning to whole of market and leaving a restricted option.

The choice should to either DIY or use an IFA.   FAs/sales reps don't offer any real advantages.
The personality of one individual can be an issue ith any adviser type but if you don't like them, then you don't employ them and find another.

ComicGeek

Pat38493 said:

Unfortunately this seems to come up from time to time - there is a "loophole" if you want to call it that, where IFAs who are retiring or exiting the business can basically give their whole portfolio to one of these other companies without necessarily openly disclosing what they are up to.

1.19% is a lot on 710K and if you are then paying FA feeson top of that, I would say that you should do something about it.

If I was you I would be looking to get a new IFA who is a proper IFA.  You could also look at transferring your funds to a DIY platform and take a one off IFA advice on where to put it or even put it into index funds - it doesn't take much ongoing effort just a bit of upfront research and you will probably save more on charges than your FA was delivering anyway.

The fees aren't actually any higher than I was previously paying, I just really don't see what the 0.5% advice fee is adding at the moment. My FA even made a song and dance about not charging for advice for moving across to TP when he should - but did the transfer in such a way to avoid actually providing advice (which we could complain about as it really hasn't been in our best interests) and then gets paid 8% by TP for introducing us!

I've been looking locally for a recommended IFA, but I seem to be in an area where people use St James's Place or other wealth management companies. Even my otherwise financially savvy Dad uses an expensive wealth management company in Surrey (nowhere near where we both live) that charges even more for less work. I met with 3 local IFAs about 4 years ago but just didn't like them.

I'll have another look at IFAs a bit further away, and see if I can find others to talk to.

ComicGeek

TallGirl said:

I found myself in the same situation with my adviser retiring and moving me to True Potential. I started a thread on it here https://forums.moneysavingexpert.com/discussion/6419835/is-it-time-to-change-from-a-wealth-manager-aka-true-potential-to-ifa-or-go-diy#latest

I managed to get True Potential removed as advisers from my SIPP which is with Scottish Widow and if I need advise I would rather pay for one off advice nearer retirement as I like you have not found TP does a lot for their money. When I told them I wanted to leave they still haven’t reacted says a lot I think. 

I’m still thinking of DIY my ISA but not done so yet.

Best of luck with what you decide. 

My FA was pressuring me to put a lump sum into my S&S ISA even though I needed access to it within 12 months and the shares were clearly no sign of significant recovery during that time. Comes to light that he needed to make the pots as large as possible to maximise his 8% payout from TP, nothing to do with providing good advice.  

In the end I put it into a standard savings account with decent interest rate, and made a reasonable amount with interest. 

After being with TP for 2 years he suddenly realised that he wasn't getting the annual payments from a couple of insurance products he had set up for us - that's the only reason he contacts us now, and I just ignore him.

Pat38493

ComicGeek said:

The fees aren't actually any higher than I was previously paying, I just really don't see what the 0.5% advice fee is adding at the moment. My FA even made a song and dance about not charging for advice for moving across to TP when he should - but did the transfer in such a way to avoid actually providing advice (which we could complain about as it really hasn't been in our best interests) and then gets paid 8% by TP for introducing us!

I've been looking locally for a recommended IFA, but I seem to be in an area where people use St James's Place or other wealth management companies. Even my otherwise financially savvy Dad uses an expensive wealth management company in Surrey (nowhere near where we both live) that charges even more for less work. I met with 3 local IFAs about 4 years ago but just didn't like them.

I'll have another look at IFAs a bit further away, and see if I can find others to talk to.

They may not be higher than what you were paying before, but they are definitely higher than what a lot of the folks on these boards would want to pay, especially for a pot that size.

Also - in my opinion you should dump your FA because I suspect that the very reason you weren't charged for the advice to move, was because he know that if he charged you to advise on it as an IFA, he would be giving you bad advice and therefore  exposed to action by you later - if he was trying to tell you he was doing you a favour this just makes it worse.  Personally I would not trust any organisation that hires such people but that is just me.

Anyway the other lesson is - in future if you have an IFA and they suddenly want to move all your funds to a different platform, be very suspicious and find out why, especially if they are asking you to waive official advice on the topic.  This issue seems to crop up quite often on these boards.

JohnWinder

ComicGeek said:

I'll have another look at IFAs a bit further away, and see if I can find others to talk to.

https://www.evidenceinvestor.com/find-an-adviser/  These people might  help you find one.

wjr4

ComicGeek said:

TallGirl said:

I found myself in the same situation with my adviser retiring and moving me to True Potential. I started a thread on it here https://forums.moneysavingexpert.com/discussion/6419835/is-it-time-to-change-from-a-wealth-manager-aka-true-potential-to-ifa-or-go-diy#latest

I managed to get True Potential removed as advisers from my SIPP which is with Scottish Widow and if I need advise I would rather pay for one off advice nearer retirement as I like you have not found TP does a lot for their money. When I told them I wanted to leave they still haven’t reacted says a lot I think. 

I’m still thinking of DIY my ISA but not done so yet.

Best of luck with what you decide. 

My FA was pressuring me to put a lump sum into my S&S ISA even though I needed access to it within 12 months and the shares were clearly no sign of significant recovery during that time. Comes to light that he needed to make the pots as large as possible to maximise his 8% payout from TP, nothing to do with providing good advice.  

In the end I put it into a standard savings account with decent interest rate, and made a reasonable amount with interest. 

After being with TP for 2 years he suddenly realised that he wasn't getting the annual payments from a couple of insurance products he had set up for us - that's the only reason he contacts us now, and I just ignore him.

I’m really sorry that this has been your experience, I’m embarrassed that there are still people like this in the industry. Would you be willing to work with the adviser via video call or are you adamant it should be in person? Video call opens you up to any adviser and there will be one you get on with. 

However, I always find that you should meet at least a couple of times in person. Try a younger adviser too, as they will not be looking to sell to True Potential any time soon! 

ComicGeek

wjr4 said:

ComicGeek said:

TallGirl said:

I found myself in the same situation with my adviser retiring and moving me to True Potential. I started a thread on it here https://forums.moneysavingexpert.com/discussion/6419835/is-it-time-to-change-from-a-wealth-manager-aka-true-potential-to-ifa-or-go-diy#latest

I managed to get True Potential removed as advisers from my SIPP which is with Scottish Widow and if I need advise I would rather pay for one off advice nearer retirement as I like you have not found TP does a lot for their money. When I told them I wanted to leave they still haven’t reacted says a lot I think. 

I’m still thinking of DIY my ISA but not done so yet.

Best of luck with what you decide. 

My FA was pressuring me to put a lump sum into my S&S ISA even though I needed access to it within 12 months and the shares were clearly no sign of significant recovery during that time. Comes to light that he needed to make the pots as large as possible to maximise his 8% payout from TP, nothing to do with providing good advice.  

In the end I put it into a standard savings account with decent interest rate, and made a reasonable amount with interest. 

After being with TP for 2 years he suddenly realised that he wasn't getting the annual payments from a couple of insurance products he had set up for us - that's the only reason he contacts us now, and I just ignore him.

I’m really sorry that this has been your experience, I’m embarrassed that there are still people like this in the industry. Would you be willing to work with the adviser via video call or are you adamant it should be in person? Video call opens you up to any adviser and there will be one you get on with. 

However, I always find that you should meet at least a couple of times in person. Try a younger adviser too, as they will not be looking to sell to True Potential any time soon! 

Thanks. Frankly I prefer it via video call, meetings in person just take too long. 

I've spoken to a few firms today to start the vetting process, but the lowest fees quoted was £21k for initial advice and 0.75% annual servicing fee. Just seems to be completely unnecessary for what I actually need.  

dunstonh

I've spoken to a few firms today to start the vetting process, but the lowest fees quoted was £21k for initial advice and 0.75% annual servicing fee. Just seems to be completely unnecessary for what I actually need.  

Many advice firms will cap their initial charge (often to around £2500-3500).   0.75% is more typical of medium size values.  Again, many firms will tier their charges based on values.

Greedy firms exist and any quoting £21k are just plain greedy.