Managed Pension charges and IFA charges

Ibrahim5

The IFA is like a lead weight pulling your investments down. Dump the weight and watch them fly like a bird.

RogerPensionGuy

This thread reminds me of a few friends that employed/employ an IFA to look after various investments including SIPPs.

My feedback is IFAs just say Royal London is really good and I've seen some of these people transfer investments outa very sensible low cost investment vehicles like SIPPs, ISAs & GIAs under the one easy single umbrella of a single IFA & a perceived warm feeling of RL.

When fagg packet calculations are done, it always appears that the above mix of IFAs & RL way under perform on value overall, but people went through the hassle of this route and think they may of paid a % cut of funds as they hopped in to RL, apparently in the long term these investments will go to the moon it is said, I'm not so sure the moon is a liklihood IMHO. 

The above is no secret, but people do like that warm feeling and a coffee or phone call with their IFAs once or twice a year, normally once unless the paying customers asks.

The above brings a though in my little head, people do decades of work and good housekeeping to hopefully achieve a reasonable life in retirement and can easily pay big fees for ever that actually erodes their good plans, just maybe these people could of invested a bit of time educating themselves to reduce costs and thus probably way out perform their pathway.

These fees are not nice in the retirement phaze, but just imagine these fees in the accumilation decades whereby all that wonder of the world/compounding is just clobbered year on year.

A few links below for information. 

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https://youtu.be/culaKrwuOfg?si=XniT8E_3Or5FOjGC

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https://youtu.be/HjzoCCFkJm0?si=dtTy68EGEXQ4rvMZ

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https://youtu.be/yVfUO_kCdoo?si=CtVSxFpudg194eKY

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https://youtu.be/N9Iyyo4n3c0?si=uxw7vmcpT5y14Fhi

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https://youtu.be/f0NhPnQ2xW0?si=g_F3_HmKwCPsg1qB

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Reference the links above, there really is so much information available that shows fees, charges, transfer fees, exit charges and plenty other hard to see costs that just feed and feed dragging down investments horribly.

Moonwolf

I do find the James Shack videos interesting as they are incredibly useful to those of us who want to DIY but are also a great illustration of where an IFA might be useful.

My thinking is, if you are happy to do a bit of DIY but not really confident then keep it simple and invest in trackers which are cheap and on average don't do worse than managed funds unless you can see the future.  The only real question is the proportion of bonds which depends on your attitude to risk, how close to retirement you are and how much of your core spending you can or have guaranteed. 

I'd use an IFA if:

- I had funds significantly over £1m and I wanted to diversify.
- I had used up all my ISA and pension allowances and wanted more complex tax planning help.
- I had inheritance tax issues and wanted help planning.

Others might have a higher or lower threshold.

In the end, as with all these things, there is a balance between paying someone else to do it and learning to do it yourself which depends on your base skills, time and interest.  I always fix my own computers, because of my job I understand the terms when I google; but I pay for someone to service my car as I have very little mechanics experience and when I have tried I never seem to have the right tools and it tends to go wrong.

dunstonh

My feedback is IFAs just say Royal London is really good and I've seen some of these people transfer investments outa very sensible low cost investment vehicles like SIPPs, ISAs & GIAs under the one easy single umbrella of a single IFA & a perceived warm feeling of RL.

RL is very good transactional provider.   The GP portfolios are fine.  It can be low cost.  

However, they are not geared to handle multi-wrapper clients.  Mainly as they don't offer ISAs and GIAs or other wrappers.

Sealy266

We are very low maintenance customers!  We are retired - been for the last 3 yrs - no other needs and all our pot is with RL GP and if we need a one off payment or increase to the yearly drawdown amount we contact RL ourselves as it’s quicker and easier than using the IFA!  I was a maths teacher so calculate the the potential affect on the pot when increasing drawdown and income off payments and check the fund growth/loss monthly to ensure we are on track still and we are in a low-moderate risk 

Ibrahim5

IFAs have to ask you lots of personal questions to assess your finances. The good ones will make notes eg son at university studying politics etc. That helps them to pretend to be your friend. So at an annual review they will ask about him every year. The IFA is basically legally fleecing you for astronomical undeserved fees. They will keep fleecing you as long as you let them. You just have to get rid of them and keep the £5k yourself. They aren't real friends. Just pretending.

wjr4

Ibrahim5 said:

IFAs have to ask you lots of personal questions to assess your finances. The good ones will make notes eg son at university studying politics etc. That helps them to pretend to be your friend. So at an annual review they will ask about him every year. The IFA is basically legally fleecing you for astronomical undeserved fees. They will keep fleecing you as long as you let them. You just have to get rid of them and keep the £5k yourself. They aren't real friends. Just pretending.

Your posts are incredibly boring, do you not have a job or something else to do?

Bostonerimus1

wjr4 said:

Ibrahim5 said:

IFAs have to ask you lots of personal questions to assess your finances. The good ones will make notes eg son at university studying politics etc. That helps them to pretend to be your friend. So at an annual review they will ask about him every year. The IFA is basically legally fleecing you for astronomical undeserved fees. They will keep fleecing you as long as you let them. You just have to get rid of them and keep the £5k yourself. They aren't real friends. Just pretending.

Your posts are incredibly boring, do you not have a job or something else to do?

I can sympathize with Ibrahim5's posts as when I see people making the same mistakes over and over again it's right to offer the same opinions and solutions over and over again.

Secret2ndAccount

Some people fix their own plumbing. Some people call a plumber. Some people manage their own money. Some people use an IFA.

I had a leaking tap, so I called a plumber. He said he would come and fix my tap. The estimate was £150. But before he would fix it he wanted to do a full survey of my house’s plumbing. The fee would be 1% of the value of my house. Then he would be my on-call plumbing expert. I said the fee seemed high.

“Look”, he said. “We are talking about potential escape of water here. If I make a mistake the damage could run into hundreds of thousands, and leave you with after-effects for years to come. I have studied, and passed exams. I have to register with a professional body, and stay up to date with current legislation. I keep detailed records, and you should see my Liability Insurance premiums. I can't just fix a tap without seeing the full picture.” So, reluctantly I agreed. He fixed the leak, carried out the survey, then put me on an annual contract. Every year he visits the house and checks over the plumbing to make sure everything’s okay. For this he was charging 0.5% of the value of the house.

2 years ago I noticed the fee had gone up by 0.2%. I checked his invoice and it said something about a DFM. I asked what a DFM was. “Oh, he said. That’s a drainage expert. I’m good at plumbing, but these guys are really good with drains. So I subtcontract the drainage work to them, and you pay them 0.2%. I’m still in charge of everything though, so I’m not reducing my fee." Reluctantly I agreed.

The final straw came last year. My plumber retired and sold his business to a large national chain. I wanted a new shower, so I called them. They sent a nice young man over. He was very pleasant, but he only seemed to want to sell me one of their own brand showers. I thought there was a wide range of showers available, but this chap’s catalogue only had a small number to choose from.

Do you think I’m getting good value from this contract or should I go it alone? I haven’t had any problems with my plumbing in a long time, and I’m worried what will happen if I turn off my annual contract.

LHW99

Bostonerimus1 said:

wjr4 said:

Ibrahim5 said:

IFAs have to ask you lots of personal questions to assess your finances. The good ones will make notes eg son at university studying politics etc. That helps them to pretend to be your friend. So at an annual review they will ask about him every year. The IFA is basically legally fleecing you for astronomical undeserved fees. They will keep fleecing you as long as you let them. You just have to get rid of them and keep the £5k yourself. They aren't real friends. Just pretending.

Your posts are incredibly boring, do you not have a job or something else to do?

I can sympathize with Ibrahim5's posts as when I see people making the same mistakes over and over again it's right to offer the same opinions and solutions over and over again.

Unfortunately Ibrahim5's comments, while based in (his experience of) reality are frequently very negative.

It is undoubtedly true that a) Independent financial advice is expensive and b) People will always know their own situation better than even a well qualified stranger can understand it.

However, if you have no interest in managing you own finances, or you have low knowledge and neither the time nor inclination to spend time acquiring it, then taking advice from an IFA will prevent you being hit by scammers, stop you making unwise decisions like withdrawing everything if the markets drop and is likely to provide a better result than keeping everything in a current account - which is not entirely unknown on here.