Received IFA advice - thoughts please?

MrsBrooks13

An IFA has advised my husband (who is a higher rate taxpayer) transfers his personal pension to one held on the Transact platform. Similarly that he does the same with his S&S ISA. Some of these shares are held as an intended investment for my son who is under 16. He does not have a JISA. 

Total charges for this proposal would be 1.7% which means over £2,000pa of our modest ‘pot’ of £120,000. This seems high to me - is it?  

And what are the advantages/disadvantages of my son’s intended investments being held in my husband’s name rather than in his own via a JISA or say premium bonds/other savings accounts or investments? 

MEM62

What is the adviser's justification for recommending the move to the new platform?  

If your son's investments are held in your husband's name then they are effectively not his, they are your husband's.  

brasso

Depends on your needs and on exactly what the IFA is doing for you. Is he also recomending an investment strategy and specific investments? Transact sounds like a platform designed to enable the IFA to actively manage your investments which (presumably) will mean additional annual charges on top of the normal fees charged by the funds themselves.

If you're a total novice and want everything done for you, maybe this will appeal. Personally I wouldn't go there. It's not so much the initial 1.7% (which could be good value if the advice is very good, and enables you to grow your wealth by at least £2000 more than you would have done by doing your own research). However, I would be nervous about putting all my wealth onto a platform that I don't have total control over, but mostly I'd be nervous about the annual charges made by the IFA for doing very little or (in some years) doing nothing at all. 

I'm in a similar situation ie I want some advice on a better investment strategy but I just want to pay for some advice which I will then apply myself to my investments (currently held on Hargreaves Lansdown). I don't want an IFA to actively manage my money or I'll be opening the door to charges which will not always be made clear.

That's just my take, and my slightly suspicious nature. 

I can't advise on JISAs etc, sorry.

Emmia

Why would it be better for your son's money to be in your husband's name? That sounds like deprivation of money saved by/for your son, to soley benefit your husband (why would this be advisable??)

Is your husband the father of your son? 

Albermarle

An IFA has advised my husband (who is a higher rate taxpayer) transfers his personal pension to one held on the Transact platform

IFA's will tend to have a favourite platform, with reasonable fees and good service and one that they understand inside out. Clearly it is their interest to have as many clients as possible on the same platform to assist efficient working. This is quite normal but you do not have to agree and can insist on staying with your existing platform. However some older ones are a bit clunky and some will not work direct with IFA's.
In the end the platform is a a lot less important than having the right portfolio of investments on it.

Total charges for this proposal would be 1.7% which means over £2,000pa of our modest ‘pot’ of £120,000. This seems high to me - is it?  
The actual cost of transfer is low/zero , but the IFA works in a highly regulated environment,and has to be seen to be taking the right and appropriate actions for your benefit. So they have to ask a LOT of questions about your personal and financial situation, risk tolerance, objectives etc - then fill in a lot of forms ( possibly in triplicate) and then make you a detailed proposal, that if it turns out be mistaken, you could sue them for.( which they have to have expensive insurance against) That is where the cost comes from. £2K seems in the right ball park.
Then normally there is an ongoing cost of 1% pa max ( can be less) for managing the investments, annual reviews. You do not have to have this ongoing cost and just take the initial advice, although most do pay it.
Remember there will a list of annual charges.

Financial advisor %
Platform %
Investment funds % ( this can vary a lot depending on the funds)

Of course the last two you have to pay when you DIY.

And what are the advantages/disadvantages of my son’s intended investments being held in my husband’s name rather than in his own via a JISA or say premium bonds/other savings accounts or investments? 
Probably the advantage is that your son will not get his hands on the money at 18 and potentially blow it.
The probable disadvantage is that your husband may end up paying some tax on them that could have been avoided.

Albermarle

brasso said:

Depends on your needs and on exactly what the IFA is doing for you. Is he also recomending an investment strategy and specific investments? Transact sounds like a platform designed to enable the IFA to actively manage your investments which (presumably) will mean additional annual charges on top of the normal fees charged by the funds themselves.

If you're a total novice and want everything done for you, maybe this will appeal. Personally I wouldn't go there. It's not so much the initial 1.7% (which could be good value if the advice is very good, and enables you to grow your wealth by at least £2000 more than you would have done by doing your own research). However, I would be nervous about putting all my wealth onto a platform that I don't have total control over, but mostly I'd be nervous about the annual charges made by the IFA for doing very little or (in some years) doing nothing at all. 

I'm in a similar situation ie I want some advice on a better investment strategy but I just want to pay for some advice which I will then apply myself to my investments (currently held on Hargreaves Lansdown). I don't want an IFA to actively manage my money or I'll be opening the door to charges which will not always be made clear.

That's just my take, and my slightly suspicious nature. 

I can't advise on JISAs etc, sorry.

This is quite common, but the issue seems to be that many IFA's are only interested in clients who want an ongoing service. Most good ones are usually busy so they can pick and choose their clients to some extent.
Not sure exactly but I think the Transact platform is about half the price of HL's.

dunstonh

An IFA has advised my husband (who is a higher rate taxpayer) transfers his personal pension to one held on the Transact platform.

Transact is a very good platform. Pricing tends to favour larger balances

Total charges for this proposal would be 1.7% which means over £2,000pa of our modest ‘pot’ of £120,000. This seems high to me - is it?  

1.7% is below the mean (the FCA published figures earlier this month show the mean initial charge is 2.1%).   So, its not high.

And what are the advantages/disadvantages of my son’s intended investments being held in my husband’s name rather than in his own via a JISA or say premium bonds/other savings accounts or investments?

Transact offer JISA and Junior SIPP.  So, that bits easy.    In you hold them outside of those but in husbands name though, they belong to your husband. Not your son.  However, in your husbands name, he can decide when your son gets the money. Whereas with a JISA, he doesn't.

I'm in a similar situation ie I want some advice on a better investment strategy but I just want to pay for some advice which I will then apply myself to my investments (currently held on Hargreaves Lansdown). I don't want an IFA to actively manage my money or I'll be opening the door to charges which will not always be made clear.

HL is about double the cost of Transact.  I like Transact as a platform but I don't use it for investments under £600k unless there is a tax wrapper required that is not available easily on another platform (Transact offers all tax wrappers).  It is one of the top platforms in terms of functionality.   It has also lowered its prices each year in the last 10 years.  

An IFA will always use a platform that caters for the intermediary market as those platforms produce the regulatory documents required. HL, for example, will not.

MrsBrooks13

MEM62 said:

What is the adviser's justification for recommending the move to the new platform?  

If your son's investments are held in your husband's name then they are effectively not his, they are your husband's.  

We are complete novices who took IFA advice on what to do with his current private pension and employee shares. We appreciate the shares are not effectively our son’s but my husband’s but the value of the shares is effectively held ‘in trust’ by my husband if that makes sense? 

MrsBrooks13

Emmia said:

Why would it be better for your son's money to be in your husband's name? That sounds like deprivation of money saved by/for your son, to soley benefit your husband (why would this be advisable??)

Is your husband the father of your son? 

They have not been purchased with our son’s money; they are purchased directly from my husband’s salary through an employee share scheme. It is merely our intention that the value of the shares is an investment for our son, who yes is both mine and my husband’s son. 

Bostonerimus1

What is the justification for the move to Transact...what benefit is there to the client? If this is for the convenience of the advisor then maybe the advisor should be paying the client?

MrsBrooks13

Apologies All, I should clarify - this is our first approach to an IFA. With the exception of an employee share purchase scheme directly out of a salary and a long- standing private pension, we have no other investments, just various savings accounts. We are (belatedly) trying to look at ways of making our money work better for our retirement and our son’s future, hence the approach to an IFA and seeking advice on here. TIA