How do I know if an IFA is good?

Janineeo

Hi my query has 2 parts - I am looking to move a pension from Prudential (1) I think I am looking for the equivalent of Tripadvisor for Financial Advisors - does this exist?  I am looking for an IFA but need to know if I can trust them and the advise they give is good. I have had some recommendations from an FA that contacted me from unbiased. He however isnt independent he only offers Tru Potential investments. (2) What fees are fair? I have currently been offered 1.35% charge for initial advice / 0.8% for ongoing advice / 0.40% Tru Potential platform charge / 0.79% ongoing fund charge. To me this seems a lot but I have nothing to compare it against.
Many thanks in advance for any responses

dunstonh

I think I am looking for the equivalent of Tripadvisor for Financial Advisors - does this exist?

No.

Most IFAs firms are small localised firms of 1-5 advisers and have very little to no internet coverage.   You will find larger firms and salesforces on the likes of Vouchedfor but those lead generation sites charge adviser firms a fortune and that usually means those firms are much more expensive than the firms that don't use them.

 I am looking for an IFA but need to know if I can trust them and the advise they give is good.

Statistically, IFAs don't have a problem with quality of advice.    It is cost of advice that is the main issue.  Some are greedy. 

 I have had some recommendations from an FA that contacted me from unbiased. He however isnt independent he only offers Tru Potential investments. 

Unibiased is no longer an IFA directory and it has priced most IFAs out from using it.   Nowadays, its mostly salesforce and national FAs that are on there.    

(2) What fees are fair? I have currently been offered 1.35% charge for initial advice / 0.8% for ongoing advice / 0.40% Tru Potential platform charge / 0.79% ongoing fund charge. To me this seems a lot but I have nothing to compare it against.

You shouldn't use an FA for starters.  IFAs have access to TP if they wanted.  TP only have access to TP.

The TP figures you have given are expensive.   For example, platform charge for IFAs is typically in the 0.15-0.25% range.    Fund charges of a passive portfolio in the 0.1x% range and ongoing advice between 0.5% and 1.0% depending on your value (the higher your value, the more tapering on the charge - or a cap/collar style)

Albermarle

 I am looking for an IFA but need to know if I can trust them and the advise they give is good. 

IFA's are highly regulated and will normally stick closely to the guidelines. If you have a relatively simple need, such as transferring a pension and reinvesting it, then you would be very unlucky to pick an IFA who did that wrong. More of a criteria is how you get along with them and have an agreed frequency for how often your situation is reviewed. Also do you prefer face to face or more by e mail etc.

currently been offered 1.35% charge for initial advice / 0.8% for ongoing advice / 0.40% Tru Potential platform charge / 0.79% ongoing fund charge

You do not say the size of your fund as that will affect charging. The platform + ongoing fund charge seem high though.

Aegis

Nearly 2% as a total ongoing charge does seem very high, but that will at least partly be linked to the size of the fund.  If you're talking about a fund of £10,000, you might well think that £200 a year for advice and investment management is reasonable, but if you're talking about a £1 million pension, that goes up to £20,000 a year, which might well feel like a very different proposition altogether.

Janineeo

Thanks everyone apologies I should have said that my pension is just over £274000 so that total fees in year 1 are £9175. The initial afmdvice part of the fee seems a lot ar £3710.  Thanks

UncleK

The initial afmdvice part of the fee seems a lot ar £3710.

The initial work is a whole bunch of analysing your financial situation and looking at options, discussing those with you and then implementing the chosen solution. Don't underestimate it. (I am a DIY fan, btw, but just saying.)

IvanOpinion

if all you are wanting to do is get someone to set up a pension for you then why not just do it yourself. You could get much lower platform fees, much lower ongoing fund charge and no initial or ongoing advice charge. 

If you are looking ongoing much broader advice then you may well benefit from an IFA.

Janineeo

Thanks I feel like I don't know enough about pensions. I do know that my current pension which I no longer pay into is with prudential has high fees and isn't flexible so I need to move it. Can you point me to some guidance about setting up a pension myself and after reading I can decide if I think I'm capable. Thanks for your help

solidpro

I've thought about the same thing a few times. I really wouldn't know who to trust and the smaller IFAs near me look to cost an arm and a leg. After seeing a few options on some of the big self-serice platforms (things like investing in stuff that adjusts automatically according to your retirement age and the simple switch between payout/accumulation), I figured the only reason I'd put in the legwork and expense of an IFA is when things get more complex - i.e. I have much more money, or I'm more likely to be dying with a big inheritance to distribute, or just my lifestyle becomes more complex (such as living abroad). 

Albermarle

Janineeo said:

Thanks I feel like I don't know enough about pensions. I do know that my current pension which I no longer pay into is with prudential has high fees and isn't flexible so I need to move it. Can you point me to some guidance about setting up a pension myself and after reading I can decide if I think I'm capable. Thanks for your help

You could start here.
Pensions: Everything you need to know for retirement - MSE
or here
Pensions and retirement | Help with pensions and retirement | MoneyHelper

Having done some basic reading, then spend some time scrolling through the Pensions forum on here and feel free to ask any questions.

gm0

There are really two parts to dealing with an existing pension and working out if it is good or bad

1a) mark to market - is it an old expensive or an old cheap product. Vs what is available now via ifa and diy

1b) does it actually do what i want (now).   e.g. investment choices or drawdown - some older products don't have it and the mechanism is a transfer out.  Or does it have some heritage feature worth hanging onto.

1c) how the processes work and the taxes for pension access - mechanical and admin stuff

2) investing at different life stages.  risk and reward. sequence risk. counterparty risk.  equities and bonds.  funds and etfs and trusts - all that stuff.  That you need *some* awareness of to plan a portfolio for DC drawdown.  How much detail you need is more about you and your psychology.  As well packaged options are readily available to choose from

You can do a pension transfer and setup for drawdown for free. Yourself.  Accountable to yourself for any errors or mistakes (picking a product or funds poorly).  To do so confidently takes time to learn enough about 1,2.  And your time has a value to you.  What you are happy to pay to avoid some of it and hire an independent to sort this out for you (relatively) safely.

And that's it.  Spend the time learning (reading).  Or spend less time picking an IFA from 2 or 3 and then going through the structured process with them.

IFA products and DIY products are not (as a generalisation) cheaper than one another or better than one another.  Either can prove prescient, or poorly positioned based on timing and what happens in the world.  The value is not "in" the product - it is around it.  Tax planning. Family goals.  Suitable approach context current rules.  Which incidently get tipped on their head fairly regularly.  As this week with DC pensions and IHT